Outsourcing market data from
The 2Q11 Global TPI Index, which measures commercial outsourcing contracts valued at $25 million or more, recorded year-over-year growth in TCV of 13 percent in Europe, the Middle East and Africa (EMEA) and 55 percent in Asia Pacific. Restructurings—contracts that are renewed, restructured or renegotiated—saw TCV growth of 30 percent over the same quarter a year ago.
During the second quarter, business process outsourcing (BPO) awards did not add to the surge they began in the first quarter, dropping 18 percent to $4.9. billion. In IT outsourcing (ITO), the traditional foundation of the market, TCV fell 18 percent, but a mega-deal in the segment signed after the quarter ended gives TPI reason for optimism for the second half.
At the halfway point of 2011, global TCV is down about 20 percent from last year, the Index found. However, the number of contracts awarded has dropped just 1 percent, which TPI said indicates a sign of the market’s continued movement away from large awards due to the increased use of multi-sourcing by corporations as well as their general reluctance to commit to large investments.
Among major industry sectors, telecom/media and manufacturing have shown growth. Financial services recorded $9 billion in TCV, its worst half-year since 2007.
Through the first six months of this year, clients have signed just four mega-deals, those awards with a TCV of $1 billion or more. The $6 billion in mega-deal TCV in the first half of 2011 is down 40 percent from the first half of 2010 and is its smallest six-month contribution ever to overall TCV. The annualized contract value of mega-relationships – those transactions with an average annual value of $100 million or more – fell by 62 percent.
The shift away from large contracts has had its biggest impact on the Americas, where the $5.2 billion in TCV was down 51 percent during the second quarter.
According to the Index, the top 15 service providers, based on TCV awarded in the first half (listed in alphabetical order):
Accenture
Aegis
BT
Capgemini
Capita
CGI
CSC
Dell
HCL
HP
IBM
Logica
TCS
T-Systems
Xerox