Global TPI index data released by Information Services Group (ISG), a leading technology insight, market intelligence and advisory services company, shows that the value of global outsourcing market has improved in the second quarter of 2012. This increase in the value is in spite of the decline in the number of outsourcing deals signed. According to the index data, five mega outsourcing deals were signed in the second quarter while it was just 1 mega deal each which were signed in the second quarter of 2011 and first quarter of 2012.
The second quarter Global TPI index measured the total contract value (TCV) of outsourcing contracts to be $21.4 billion. There has been a 7% increase in the TVC from the previous second quarter of 2011 and first quarter of 2012. The value of each mega deal contract is estimated to be $1 billion and more.
Excerpts from the report:
- Five mega outsourcing deals those with contract value $1 billion or more were signed in the second quarter of 2012.
- 11 outsourcing deals worth $100 million were initiated in the second quarter. This is the highest since 2009.
- The improvement in the contract value was driven by a strong growth in the global business process outsourcing (BPO) market and the economic growth in the Asia-Pacific region.
- The mega deals signed accounted for 30% of the TCV in the second quarter.
- Out of the five mega deals signed, three contacts were awarded to Brazil and India.
- BPO sector contributed $8.3 billion to TCV for the second quarter. The TCV of BPO was down by 13% in the first quarter of 2012. Out of five mega deals, BPO sector bagged two deals with a combined TCV of $2.5 billion.
- IT outsourcing contract deals contributed $13.1 billion to the total contract value for the second quarter.
- It is expected that in future more mega deals would be awarded to less mature regions.
- The mega deals were awarded by the firms in telecom, banking and consumer goods industries.
- The TCV for Asia Pacific region was measured to be $4.7 billion, a growth of 181% year on year basis. The TCV for the region in the previous quarter was up by 44%.
- TCV for America was measured to be $ 8.3 billion, a decrease of 6% from the first quarter and an increase of 6% when compared to the second quarter of 2011.
- TCV for Europe and Middle East regions was measured to be $8.4 billion.
Further the report forecasts a weak growth for the third quarter of the year but a robust growth in the last quarter as more mega deals are in the pipeline.