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Thursday, April 19, 2007

Changing Outsourcing Trends

TPI's Q1 index shows a changing trend :
- 1Q07 TCV and ACVSoft market, especially in the Americas and in BPO
- Adoption of Outsourcing activity in managed network services outsourcing within the relatively flat ITO market.
- Lessened restructuring impact on broader market
- Business Process Outsourcing recorded a recent low point by number and TCV
- Shift away from large multi-process BPO agreements to single-function contracts of a smaller size

This is surprising - one hopes that this is a passing trend considering that the year 2006 ended on a positive note for the outsourcing industry. Several positive datapoints clearly pointed to that. Some of them were:

- Market indices for contract length and value rose for the first time since 2003.
- "Megadeals" were on track to match or exceed 2005 levels.
- The number and value of outsourcing deals above $1 billion for an individual service provider, or megadeals, are poised to increase in 2006 after seven years of gradual declines.
- The average outsourcing deal contract value
increased 55%, from $201 million in 2005 to $312 million in 2006.

Today no one is feeling the pinch owing to reduced contract awards that much because there's no erosion of marketshare. Service players maintain that while there has been a talk about slowdown and all those things, they believe that the global IT service industry continues to show a strong growth.

Hopefully things will change moving forward vindicating this position.

Image courtesy : TPI

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