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Friday, April 14, 2006

The TPI Quarterly Index – Interesting Trends

I listened to the Wachovia sponsored TPI quarterly index webcast. The trends highlighted in the presentation and discussions are worth closely following:

- The quarter is witnessing a lot of outsourcing deal restructuring with BPO deals outnumbering outsourcing deals. Strongest quarter for mega deals in the past three years
- Average contract duration is impacted by the more commodity like nature of the ITO contracts and the more transformational nature of the BPO contracts (1/3rd of the BPO deals are said to be transformative).
- Retaining Incumbency is an increasing Challenge.
- More contracts were signed than in any other first quarter and more associated TCV was awarded than in any first quarter since 1999.
- Mega deals - $1billion plus TCV are doing well as well as 50 million size deals.
- Bullish observation is tempered by the fact that restructurings continued
to account for a growing number of contracts and their TCV
- More than $22B in Pipeline Value;About $6B up for Award in Next Three Months
- The forecast that annualized revenue of the ITO market will decline by 3-4% while BPO will increase by double digits in 2006
- Many small deals actually take longer to negotiate and close than large deals due to learning curve effects
- FS deals are little less than 50% Of BPO deals, procurement and HR follow in terms of share of business.
- The IT Outsourcing segments is seeing a large number of players. Only the largest firms (IBM, Accenture &EDS) operate on both the IT Outsourcing and BPO arenas.
- Big 4 North American firms are gaining more share and Indian firms have a miniscule share of business.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
"All views expressed are my personal views are not related in any way to my employer"