Acquisition, innovation and bankruptcy poised to upturn business process outsourcing industry, says analyst company Gartner.

The next three years will witness dramatic upheaval in the business process outsourcing industry, according to a new report from analyst company Gartner.

One in every four of today’s top BPO providers will no longer exist by 2012, the report predicts. That means organisations that employ BPO services must consider the long-term viability of their supplier engagements carefully, it adds.

A number of factors have left many BPO providers perilously vulnerable to acquisition, to disruption by innovative competitors or to going out of business, Gartner says.  Chief amongst these factors are the number of unprofitable contracts that many BPO suppliers have signed in order to remain competitive, and a failure to grow their business, whether through a lack of financing or from operational inadequacies.

The collapse of the financial services in 2008 has also endangered BPO providers. “Sourcing executives should be aware of the potential impact if their provider has a significant amount of revenue (more than 85 percent) as a financial services … BPO vendor,” says Gartner.