Chicago — While business process outsourcing (BPO) is developing into a mainstream management tool, it remains complex and many insurance companies vastly underestimate its challenges. That’s the essence of a report published recently by Diamond Management & Technology Consultants Inc., which holds that roughly one-third of organizations prematurely terminated at least one BPO relationship during the past year.

Of the 185 buyer participants participating in the study, 37 from insurance companies, 32% prematurely ended at least one onshore BPO relationship and 34% terminated at least one offshore relationship over the past 12 months. Moreover, the study found that 44% of buyers who prematurely ended an onshore contract have actually terminated more than one contract over that period. Likewise, 39% of buyers who prematurely shed an offshore BPO contract did so on more than one occasion.

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