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Everest: 2011 Outsourcing Deals Declined, Captive Activity Increased

by: Sarah Joson

Friday, February 10, 2012 | Outsourcing News |

Q4 2011 Global Outsourcing Activity

PRweb.com shares Q4 2011 and 2011 market activity reports done by global services advisory and research firm Everest Group. These are: Market Vista: 2011 in Review and Market Vista: Q4 2011.

The reports show that compared to 2010, outsourcing transactions in 2011 declined as the latter half of the year posted fewer transactions - 2011’s Q4 posted the lowest figures since 2009’s Q1. On the other hand, 2011 saw an increase in captive activity compared to 2010, even with the slight decline during the second half of the year.

Research managing partner Eric Simonson explained that 2011 showed a recurrence of what was seen during 2010, where the first two quarters posted an increase then a slight drop was seen in Q3 and Q4. Also, the robust captive segment shows that captive models are great tools to support business strategies. However, several factors may have an impact to the captive activity this year, including the financial situation in Europe, anti-outsourcing efforts in the US, as well as the emergence of new technologies.

There was a slight drop in the number of outsourcing deals last year compared to 2010 (from 1,979 to 1,929), though there was an increase in contract renewal and restructuring in 2011. About two-thirds of the total number of outsourcing transactions were from the IT outsourcing segment, while 32 percent were BPO deals.

Here are the other highlights of the Everest Group reports:

• Finance and manufacturing sectors contributed the highest number of outsourcing transactions.
• US outsourcing transactions significantly went down last year, while UK posted a 32-percent increase compared to 2010 figures.
• Four mega deals with contract values reaching more than US$1 billion each were signed in the last quarter of 2011.
• Brazil and Poland turned out as mature global outsourcing destinations.
• The political situation in North Africa highlighted the need to manage/mitigate risks in outsourcing portfolios.

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