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Q3 2012 Outsourcing Activity Slows Down

by: Sarah Joson

Friday, November 9, 2012 | Outsourcing News |

Outsourcing activity falls 20%

According to a study done by research and consultancy firm Everest Group, the outsourcing activity for Q3 2012 fell 20% year-on-year, from 472 during 2011’s third quarter to 381 in the same quarter this year. The value of outsourcing deals also decreased.

ComputerWorld.com shared insights about the Everest report, where it was found out that the drop in Q3 is more worrying than Q2 figures, because it is the quarter that is supposed to post the highest activity in the outsourcing industry.

Key influencers during Q3 are the political opinions at the presidential election campaign in the US as candidates were lobbying to bring jobs back home, and the economic challenges in the US and Europe.

Several financial organizations in the US even avoided activities related to offshore outsourcing to countries like India and the Philippines as they’ve received grants from the government amidst the peak of presidential campaigns.

Offshoring accounted for 47% of the entire number of contracts during Q3, and 38% of which were rewarded to countries in Asia.

Everest noted that they were only able to gather data from companies that publicly shared information, new contracts, and renewals. However, it was said that if private contracts were included, it would still fall short compared to Q3 2011.
Also, the report shared that the value of business process outsourcing (BPO) contracts fell year-on-year from 2011 Q3’s $2.7 billion to $1.5 billion for third quarter this year.

Sizes of contracts are shrinking in almost every segment, according to practice director for global sourcing at Everest, Salil Dani.

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