Customer Relationship Outsourcing in Europe

Despite the slower than originally expected economic growth over the next few years, the number of outsourced agent positions will continue to grow healthily. The overall number of agent positions in Western Europe will rise from 96,000 to 176,000, by the end of 2005. This growth is partly new agent positions, but largely from the replacement of previously in-house agent positions.

As shown in Figure 2, the total European outsourcing market will more than double in the next four years, from $5.1 billion in 2001 to $10.5 billion in 2005. This growth is greater than the growth in agent positions for two primary reasons:

However, despite improving margins in the medium term, margins in the short term will be kept down by the difficult macroeconomic conditions. Worsening revenues for clients will in turn will lead clients to demand better value for money. Combined with a high level of competition in most markets this will depress the price of outsourced services. At the same time, the provision of increased value in both technology and consultancy will be pushing margins in the opposite direction. Over the full period this will be the dominant trend, resulting in faster growth from 2003 onwards.

Product development