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2012 TCV and ACV Report of the Global Outsourcing Industry

by: Sarah Joson

Monday, April 8, 2013 | Outsourcing News |

An article posted at BPOOutcomes.com highlighted the recent webinar done by IDC entitled "The Pulse of Outsourcing Q4 2012". It showed nearly an eight percent drop in total contract value (TCV) for global outsourcing deals that are worth $10 million and above. Also, IDC monitored 22 mega deals that are valued $1 billion and above, and saw that from $150 billion in 2011, it fell to $140 billion last year, which equates to a 20-percent drop in TCV and activity.

On the other hand, the actual contract value (ACV) grew from $24.8 billion to $27 billion during the same period. ACV of large deals did not change while the commercial sector ACV experienced a decrease of 29 percent. The latter was countered by a 16-percent increase in the public sector ACV.  

TCV Results (2011-2012)
  • Global business process outsourcing (BPO) TCV matured seven percent due to the manufacturing and government segments, but was countered by regressions in the communications/media segment.
  • BPO deals made by US-based businesses grew 15% but were evened out by the drop of deals in other regions.
  • TCV also decreased from $23.3 billion to $17.5 billion for the commercial BPO sector.

 TCV Trends (2013-2014)

  • IDC projects that contracts that are up for renewal could reach $257 billion.
  • Manufacturing will take the lead in the commercial segment with six megadeals and 207 deals up for renewal - with TCV above $100 million.
  • Other segments such as government (17 mega deals, 194 deals with TCV of $100 million-plus), communications/media (three mega deals, 43 deals with TCV of more than $100 million), and BFSI (five mega deals, 91 deals with TCV of more than $100 million) are predicted to reach full TCV for the same period.
  • For the global outsourcing industry, five mega deals and 91 deals with TCV of $100 million are projected to be renewed in the months to come.
Value-added Services in Outsourcing Operations

The financial management sector, talent/skills segment, market dynamics division, and enterprise-type businesses are able to reduce costs, access specialized skills that are not available internally or locally, and streamline processes.

BPO also drives innovation in operations, transformations and technology, which then helps in expanding the market of businesses.

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