January 20, 2012: Information Services Group, one of the major technology information, market intelligence and consulting services companies published TPI Index data which highlights robust growth in the global outsourcing market during the fourth quarter, while the entire year witnessed record contracting activity.
The index is prepared on commercial outsourcing contracts worth $25 million or more. As per the index, the industry clocked a Total Contract Value of $ 26.4 billion in the fourth quarter of 2011, experiencing a growth of 7% compared to the same period in 2010. The growth was facilitated by mega deals with total contract value of USD 1 billion or more in the business process outsourcing sector and by areas such as Europe, Middle East and Africa.
In the year 2011, the total contract value has increased to $ 95 billion, with a growth of 3 per cent over the previous year, and the highest value since 2005. Also the year was the busiest for the outsourcing sector with total awards reaching 870, which is far ahead of the five year average of 690.
The study of TPI index data explains that the increase in the contracting activity is because of the decade long increase in the smallest awards. Even though the amount of mega deals and mid-sized deals have remained relatively stable since 2002, the amount of deals which is worth $100 million or less has increased three fold.
According to John Keppel, President, Research and Managed Services, ISG, the increase in contracting activity along with the increase in the overall contract value is a major shift in the outsourcing market across the world.
The index which is released by ISG, offers a quarterly over view of the outsourcing industry which is of assistance to clients, suppliers, analysts and the media. It has observed that the increase in large contracts towards the end of the year has boosted the market in the last quarter. The Total contract value of the mega deals has increased by 22% over the previous quarter and is stable year over year. In 2011, the major portion of the mega deals was contributed by the EMEA region. With the increase in mega deals the region recorded the best performance across the world.
The Americas witnessed an increase in TCV of 22% in the last quarter, year on year. TCV dropped by 20% from 2010 in the region. In the Asia Pacific region TCV dropped 42% year on year while the annual TCV dropped 10 per cent.
In the Information Technology outsourcing sector witnessed a rise in the deals by 8%, with an increase of 86% since 2005.