Consider the Source

Checking Outsourcing

Today's blog comes from Peter Allen, Partner and Managing Director, TPI.

If you want to know what’s next in the outsourcing industry look at deviations away from historical norms, typically exhibited by change in market volumes.

To wit:  The popularity of credit card payments means that fewer and fewer American consumers write checks nowadays.  To the outsourcing industry, trends like these create opportunity for more leveraged service models.

Around 49.5 billion checks were paid in the U.S. during 1995, with that number slumping to 36.6 billion checks in 2003, according to data from the Federal Reserve. Meanwhile, credit card transactions leapt from 15.6 billion in 2000 to 19 billion in 2003, while debit card transactions surged from 8.3 billion to 15.6 billion over that time period.

Vive la Difference!

Today’s guest blog on the demand for outsourcing comes from Duncan Aitchison, Partner & President, TPI EMEA.

With the data now in for the global outsourcing market in the first half of 2008, two facts stand tall above all others: demand for outsourcing has never been healthier and Europe’s love affair with outsourcing is the reason why.

The last nine months have witnessed the largest volume of total outsourcing contract value ever signed during three successive quarters and the first half of the year has been the best for the last ten years. By any measure – Total Contract Value (TCV), Annual Contract Value (ACV), number of contracts signed, number of mega deals – the outsourcing market is now at its most vibrant.

What makes today so different from the boom outsourcing markets of yesteryear is where demand is coming from. So far this year Europe has accounted for 65 percent of the contract value awarded around the world. Indeed, in each of the last six quarters, Europe has led the markets in terms of TCV signed. It also now leads the way in terms of numbers of contracts, ACV and big deals awarded. In fact, nearly 80 percent of the $1 billion contracts signed so far this year have been in Europe.

The billion dollar question is: how long will Europe’s current love affair with outsourcing last? When will we see demand in this region begin to emulate the recent buying patterns in the U.S.?

Paradoxical Market Metrics

Today's blog on TPI's 2008 second quarter Index comes from Peter Allen, Partner and Managing Director, TPI.

Having just posted the scorecard for the global outsourcing industry’s contract awards for the first half of 2008, I must say that there are more than a few conflicting messages being bantered about.

We’ve been producing the TPI Index for almost six years now, and our track record of reporting on the market size and trajectory has a consistently small margin of error. No one is perfect in this art, but our business intelligence analysts are usually right on target. We invest considerably in tracking the market to help guide our clients with facts about peers and providers in particular domains.

The report for the first half of 2008 was striking.

Desperate or Ambitious Sourcing?

Today's blog on current affairs and sourcing comes from Peter Allen, Partner and Managing Director, TPI.

Generally, I’ve found that clients of outsourcing are either desperate or ambitious. In today’s recessionary economic markets, there’s decidedly a desperate tone among the buyer executive team driving the introduction of change. Can you blame ‘em?

Look at the wide array of industry segments that are suffering from the economic spiral of 2008: mortgages, lending, transportation, hospitality, automotive, retail -the list goes on.

Many of the issues causing today’s economic pressures are here to stay for a long time. The energy problem is not going away. Credit will be in short supply.  Financial institutions are more risk averse. And inflation is a growing concern.  When these pressures take flight, it’s hard to catch up.