Friday, April 13, 2012
Global outsourcing activity appears to have slowed in the first quarter, although the overall markets continues to show strong growth. According to the most recent Global TPI Index from Information Services Group, the total contract value (TCV) for outsourcing deals dipped 22 percent from a year ago to reach $18.7 billion. The figure was down 35 percent from the previous quarter.
Furthermore, ISG reported 184 contracts were awarded during the January-March period, reflecting a 31 percent year-over-year drop and a 18 percent quarterly decline. One of the reasons growth was slower in the first quarter is that only one so-called "mega-deal" was completed, which is defined as a contract valued at more than $1 billion.
The first quarter data stems a record-setting second half of 2011, in which global TCV increased 29 percent year-over-year to a reach record $55.8 billion.
"This first-quarter slowdown follows the strongest half for outsourcing in a decade, making for difficult comparisons," said John Keppel, partner and president of research and managed services at ISG. "We saw this same hangover effect in early 2010 as well as in early 2006. So there is historical precedent for the industry taking a breather after two robust periods."