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Archive for the 'Outsourcing News' Category

Since we are entering the fourth quarter of 2016 and before third quarter reports are released, here’s a rundown of what happened during the second quarter.

Global outsourcing industry in review

Ten key outsourcing markets have been analysed in the Q2 2016 Supply Wisdom Monitor: Country Risk Index. The ranking factors used by SupplyWisdom.com are the country's financial stability, scalability, geo-political soundness, infrastructure, quality of life, business environment, among others.

Q2 2016 Global Outsourcing Industry in Review - MicroSourcing


Global Outsourcing Activity Surges in Q2 2015

by: Sarah Joson

Monday, July 20, 2015 | Comments (0)

Category: Outsourcing News

Q2 2015 Outsourcign Activity Stronger than Q1

Market intelligence firm Information Services Group recently released its ISG Outsourcing Index where it was revealed that the outsourcing activity and annual contract value for during the second quarter had recovered from the weak first quarter. The report also indicated that smaller contracts are gaining traction, ACV in the Americas gains pace and has doubled in digits, EMEA and Asia-Pacific had surpassed the $2 billion mark for the 6th straight quarter and has pulled through the lack luster first quarter, but the growth in ACV is slower compared to last year, and the future is filled with uncertainty as the market continues to adopt Digital As-a-Service.

However, the market report indicated that although outsourcing activity improved globally, the value of the deals had declined.

The ISG Outsourcing Index™ analyzes and measures commercial outsourcing contracts with annual contract values (ACV) of $5 million or more and found that 451 deals were signed during the second quarter, on top of the 745 agreements in the first six months noted this year.

Even with the sharp increase in outsourcing activity, the $6.2 billion ACV seen circulating in the second quarter is seven percent less than the figures posted during the second quarter of last year, but jumped 24 percent from the first quarter of this year. The total ACV posted in the first half of this year reached $11.2 billion, 14 percent down from the previous year. One of the factors identified as the reason for the drop is this year’s first quarter - the slowest in the last 10 years.
Several reasons are linked with the obvious increase in activity which are buyers are looking for more convenient deals - cheaper and more flexible now that technology is disrupting much of the environment in the outsourcing space.
According to ISG President and Partner John Keppel, the outsourcing market is continuously adopting global options, which then further accelerate the activity. As a matter of fact, three of the last six months have posted the highest outsourcing activity. Moreover, he anticipates that the trend towards smaller deals will continue adding that from the economic downturn in 2008; only the volume of contracts grew, whereas the ACV maintained momentum.

Keppel added that ACVs grew from a slow first quarter and surpassed the $6 billion without backing from mega deals. Only two deals in the second quarter had an ACV of over $100 million, which is very unlikely. Clearly, in today’s time, the size of the deal is no longer the driver of the market - it is now the size of the demand.


WhaTech.com recently revealed the highlights of a study in the world of global healthcare contract research outsourcing (HCRO) market. “Healthcare Contract Research Outsourcing Market - Global Industry Analysis, Size, Share, Trends And Forecast 2012 - 2018” was done by US-based market intelligence firm Transparency Market Research. The report covers not only the current contracts within the global healthcare contract research outsourcing market, but previous data as well. Data from the report are used to create predictions on the market’s development up until 2018.

Back in 2011, the HCRO market was valued at US$25.08 billion. It has been steadily growing at a compound annual growth rate (CAGR) of 14.7 percent, and with the same growth rate, it could be valued at US$65.03 billion by 2018.

Four categories of the global healthcare contract research outsourcing market

The global healthcare contract research outsourcing market is composed of four categories on the basis of services: clinical trial services, clinical data management services, regulatory services, and medical writing services. The clinical trial outsourcing segment took the lead in the global healthcare contract research outsourcing market, accounting for US$14.21 billion in 2010. As for the location, North America accounted for majority of the market share with 64.1 percent. Looking back on the statistics, Europe and Asia follow the North American market for HCRO.

The report also stated that the HCRO market in Asia will continue to grow due to the increasing number of contract research service providers. As for the recent upward trend in the global HCRO market, it was found that the increasing cost and reduced productivity of healthcare research are driving growth. Another factor that’s seen driving the growth of the HCRO market is the expired patent for in-house healthcare research amongst healthcare providers. Moreover, the declining research and development activity for new drug formulations, as well as globalization of drug development, help in the growth of the market.

However, quality issues, varying regulations, and approval processes for drug research are cited as threats to the growth of the HCRO market. According to the report, drug research, which is done remotely or does not have on-site supervision from the client company, is at risk for quality issues relating to methodology, equipment, and hygiene protocol.

Q2 2014 Outsourcing ACV

A post at MarketWatch.com reveals the latest study done by market intelligence and advisory services company Information Services Group (ISG). The report shows that global outsourcing activity peaked during this year’s second quarter, and has likewise boosted contract values during 2014’s first half.

In ISG’s Outsourcing Index, commercial outsourcing contracts with annual contract value (ACV) of $5 million or more were recently analyzed. It was found that 340 contracts were signed during the second quarter. Most of the activity was detected from deals not exceeding $40 million annually.

Compared to last year’s second quarter, ACV is up by 72 percent, generating $6.4 billion. All of this happened even as the volume of mega deals - which are valued $100 million or more - dropped.
In addition to that, the strong figures posted during this year’s first quarter boosted the overall standing of this year’s first half with an impressive 30 percent increase in the total number of contracts (663). The total ACV for the period is $12.4 billion - the third best ACV ever recorded and is 34 percent higher than last year.

According to ISG President and Partner John Keppel, growth can be seen almost everywhere in outsourcing. He said the number of deals is growing incessantly, momentum in three key regions - Americas, Europe, and Asia-Pacific - continue to rise, ACVs all over the world are surging, and high-valued information technology outsourcing (ITO) gains traction. 
The rising number of smaller-sized deals is believed to be sustaining the market. This is because large companies are closing smaller contracts with shorter duration to several providers instead of sticking with just one. Mega deals, on the other hand, dropped from this year’s first quarter when 11 deals were signed, to just seven $100 million-plus deals signed during the second quarter. Still, the low volume of mega deals will equate to positive projections for the rest of the year.

The growing market also signifies growth in restructured contracts and even flow of new scope awards. In addition to that, restructured contracts with a combined value of $4.5 billion broke records in the first half, while new-scope ACV with $7.9 billion is in line with the usual levels over the past few years.

According to research data from sourcing advisory firm Information Service Group (ISG), the outsourcing market of EMEA (Europe, the Middle East, and Africa) continues to withstand the various changes and forces that have come along its way.   

Global outsourcing market growth

During the first quarter of 2014, nearly 165 contracts were closed/renewed from the EMEA outsourcing market. This is 21 percent higher than last year’s first quarter, but only a percent more from the previous quarter. However, the market was estimated to be worth €2.4bn for this year’s first quarter, a 10 percent increase from the previous quarter, and 29 percent higher than the first quarter of 2013.
Meanwhile, growth in the global outsourcing market remains constant with €1.5bn in contracts being awarded in America. This shows that growth slowed down by 16 percent compared to 2013’s first quarter, but posted an increase of 32 percent in the fourth quarter of 2013.

ISG also pointed out that 76 percent of the total contract value posted for the first quarter is accounted for by new contracts. This is a 48 percent increase year-on-year, and is the highest value posted in four years.

In line with that, UK posted a total contract value (for the first quarter of 2014) of €1bn, which is 33 percent higher quarter-on-quarter and 66 percent higher year-on-year. The UK also posted 59 closed deals, the highest volume so far in the last three quarters.

David Howie, a partner at ISG, pointed out that UK is the frontrunner of Europe’s bullish outsourcing industry. He said Q12014 is a good period for the UK because it has outdone the average performance of the last eight quarters wherein the average total contract value per quarter is $800m.

Howie believes that UK and the US will continue to outdo outsourcing growth in Germany and the rest of Europe. He stated that there are similarities on how economies are run in the two countries.