by: Sarah Joson
Thursday, October 18, 2012 | Outsourcing News |
The report analyzed deals with annual contract value (ACV) of $5 million and above, reaching a total of $4.8 billion. This would be the second-highest Q3 total, but it was also found out that the same quarter fell six percent from Q3 2011, and 10 percent from this year’s second quarter.
A three-percent growth in ACV was identified during 2012’s Q1 to Q3, which now has a total of $14.8 billion. The key drivers for the past three quarters are the active outsourcing contracts in the Asia-Pacific, more mega deals found in emerging markets, and the ongoing increase of business process outsourcing (BPO) deals worldwide. Moreover, contracts with an ACV of $100 million and above this year have already surpassed the total value of the mega deals in 2011.
According to ISG Partner & President for Research and Managed Services John Keppel, this is an upset compared to Q2’s performance this year, but he said it is a known fact that Q3s are usually the weakest. Amidst the decline in figures, he said the global market is gradually becoming more familiarized with other important segments. He also expected that the market will surpass 2011’s $20 billion in ACV, through the larger deals that are waiting to be closed.
The BPO segment’s ACV in 3Q12, which has a total of $1.6 billion, is 12 percent higher than same period of last year. However, it fell 32 percent from this year’s Q2. IT outsourcing (ITO), on the other hand, posted $3.2 billion in ACV, which is 13 percent lower in terms of year-over-year. However, it increased 8 percent from Q2.
The Asia-Pacific region is gaining momentum in 2012 among other emerging markets. In Q3, it posted an ACV of almost $700 million. It declined 51 percent sequentially but increased 55 percent year-over-year. The ACV of the region from Q1 to Q3 reached $2.5 billion, a 72 percent increase over 2011.
Meanwhile, the US posted $1.6 billion in total ACV for Q3, an 11 percent decline from Q3 2011 and eight percent from Q2. The EMEA region (Europe, Middle East, and Africa) posted $2.5 billion of ACV, 12 percent lower from Q3 2011 and a 14-percent increase from Q2.