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By Tony Hallett, 24 January 2000 00:30

NEWS Some of the largest outsourcers in Europe are perceived as failing to add value to their clients' businesses, a perception that will drive contracts to smaller rivals in the long run. According to a Morgan Chambers survey of 640 users at the end of last year, major players such as EDS and Sema Group are two of the worst offenders. Smaller outsourcers - even those as large as ITNet - come out as being able to work more closely with clients in the study of outsourcing relationships. Robert Morgan, chief executive of Morgan Chambers, told Silicon.com: "Users' perception is critical. Service providers want to move to the profitable higher ground of business process outsourcing, and to do that, they have to have a good client-outsourcer relationship." Morgan Chambers also asked respondents - who among them have 850 contracts, mainly in the UK - about their relationship with outsourcers in the run up to the year 2000. Alarmingly, many service providers were seen as lagging behind internal IT departments in terms of bringing the millennium date change to board level attention. This is surprising, according to Morgan, given outsourcers are often trying to deal directly with boards, and put themselves in a position to negotiate any future business process outsourcing (BPO) contracts. In terms of clients being aware of suppliers' contingency plans for Y2K, ITNet scored 100 per cent, Cap Gemini 78, Sema 71 and EDS 62 per cent. The latter figure means 38 per cent of the Texas company's clients weren't sure what the routine would be in case of Y2K glitches. However, in spite of the reassessment of outsourcing arrangements the date change brought about, few companies have chosen to change the way they deal with service providers.