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2013 Global Outsourcing Activity Drops compared to 2012

by: Sarah Joson

Tuesday, February 11, 2014 |

Outsourcing Activity Decline

Recently released data from technology insights and market research consultancy agency Information Services Group (ISG) showed that during the latter half of 2013, the number of signed outsourcing deals in the Asia-Pacific region increased. However, the value of these deals remained flat which could be a sign that we’ll be seeing smaller deals. This is the current trend globally.
The Outsourcing Index for the Asia-Pacific region measures commercial contracts that have an annual contract value (ACV) of $5 million and up. 2013 posted an ACV of $2 billion, which is 80 percent lower than the remarkable performance in 2012.

In 2013, only 126 contracts were recorded, which is lower than the deals closed in 2012. It is more in line with the number of deals signed during the period of 2009-2011. During the second half of 2013, volume activity increased by seven percent compared to the first half.

The decrease in number of large-scale contracts in 2013 was caused by the substantial decline of ACV. In fact, for the deals belonging to the $40 million-$99 million bracket, only three were closed compared to 2012’s 12 deals.

A lot of the contracts closed in the Asia-Pacific region were profiled in the $5 million-$39 million range.

According to Sid Pai, Partner and President at ISG Asia-Pacific, 2012 was the best year for the outsourcing sector in the Asia-Pacific region. The executive added that although 2013 was a far cry from 2012’ performance, it banked on the long-term trend in the region. The value of deals below $40 million last year remains consistent with the five-year averages.

Pai noted that over the last 10 years, closed deals have increased by 50 percent, but ACV remained the same and added that with the increased competition, the value of deals is declining as multi-sourcing is slowly being adapted by business executives.


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