By Mark Mayo, Partner & President, TPI Global Operations, TPI
This morning we released the TPI Index, outlining global outsourcing activity for the second quarter and first half of 2010. After the purge of pent-up contracts in the fourth quarter of 2009 that spilled into the first quarter of 2010, the rebuilding of the industry that was expected did not materialize in the second quarter. In fact, total contract value (TCV) for the second quarter dropped to about $18B – a decrease of about 13 percent when compared to the previous quarter (1Q10) and the same quarter last year (2Q09). TCV for the first half of 2010 was flat when compared to the same period last year.
While cost cutting became the most important reason to outsource during the economic downturn, TPI found that innovations such as cloud computing are beginning to change how companies approach their sourcing strategies. Now I will share a brief outline of how outsourcing activity fared regionally, by industry, and by service area:
- Regionally, the Americas experienced the best first-half performance since 2006, with TCV up 30 percent – due to activity in the United States. EMEA performance lagged, on the other hand, with reduced activity in the UK countered somewhat by gains in the Nordic region.
- TCV for the three industries that have traditionally led outsourcing activity – Financial Services, Manufacturing, and Telecom & Media – declined in the first half of this year, compared to both the first and second halves of 2009.
- IT outsourcing (ITO) TCV dropped nearly 30 percent compared to the previous quarter, but was up five percent in this half of 2010, thanks largely to the large contract restructurings in the first quarter of 2010. Business process outsourcing (BPO) saw modest gains in the first half, with a significant portion of BPO activity occurring among contracts valued at less than $25M.
The overall industry picture for the remainder of the year is cautious and we anticipate that the third quarter Index will be modest – in keeping with historical third quarter activity. While fourth quarters are typically stronger, as we experienced in the fourth quarter of 2009, we believe that it is unlikely for the fourth quarter of 2010 to repeat the previous year’s surge.
Check back with us for the 2Q10 EMEA TPI Index on July 26th and the 2Q10 Asia Pacific TPI Index on July 28th. The full TPI Index presentation can be found below.
The dip in IT outsourcing has finally over..its now in track. Its need to be maintained again to its high levels.
Posted by: Accurotech | October 07, 2010 at 06:22 PM