Q4 2009 Outsourcing Recovery
Results from the Market Vista: Q4 2009 report by global consulting and research firm Everest indicate that the global outsourcing market is seeing signs of recovery.
Everest’s study findings include the following (compared to the Q3 market report):
- Twenty-six percent of deals signed in fourth quarter were held by business process outsourcing (BPO).
- IT outsourcing (ITO) comprised 71 percent of transaction activity.
- The annual contract value (ACV) increased 72 percent to about US$4 billion, mainly due to mega-deals with ITO and BPO components.
- About one-third of deals signed in fourth quarter came from BFSI (banking, financial services, insurance) and MDR (manufacturing, distribution, retail) verticals.
- The BFSI vertical comprised one-sixth of the overall market ACV, while ACV from the MDR vertical increased 44 percent.
- Buyers in the United States and Europe increased global transaction activity, making up 75 percent of total transaction deals signed in fourth quarter.
- Significant increase in ACV was seen in the United Kingdom.
- Captive activity sets two-year high mark, with deals from MDR and BFSI verticals, and 40 new announcements, led by India (14) and remaining parts of Asia (18).
- Tier-I and Tier-II locations contributed equally towards overall offshore delivery.
- Ten acquisitions and 39 new alliances were reported in M&A.
While several mega-deals resulted to significant increase in ACV, Eric Simonson, Managing Principal of Research, said there are still companies that enter small deals.
These evidences show that things are looking up for the global outsourcing market. It may be a slow start, but what’s important is that we are seeing steady growth across the world - from US and European buyers to emerging trends and outsourcing locations.