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Global TPI Index Shows Companies Moving to Multi-Sourcing

by: Ronald Escanlar

Friday, January 21, 2011 | Outsourcing News |

A decade of data on the outsourcing industry shows that companies are moving towards smaller contracts and multi-sourcing deals, according to research released today by sourcing data and advisory firm TPI.

Increased reliance on multiple outsourcing service providers

According to the 4Q10 Global TPI Index, the number of large companies relying on multiple outsourcing service providers increased from 30 percent in 2000 to 53 percent last year. Data shows that almost half of these companies relied on more than three service providers, and not a single one returned to single-sourcing.

“As they have grown disillusioned with single-source arrangements, global organizations are increasingly opting to employ multi-sourcing strategies,” said John Keppel, Partner and President-Information Services & Chief Marketing Officer, TPI. “By using multiple providers, they can customize their sourcing solutions and leverage the skills of the best in each market. We expect the preference of companies to multi-source will continue to grow as it allows them to tap the best talent possible for their needs.”

The index, which is on its 33rd quarterly release, covers commercial outsourcing deals that are worth more than $25 million. For 2010, data shows that total contract value (TCV) worldwide amounted to $79 billion – a decrease of 11 percent from the previous year.

Information technology outsourcing (ITO) continued to drive the outsourcing market, despite a decline of 4 percent from last year. Business process outsourcing (BPO) fell by 31 percent, while human resources outsourcing fared better, recording its best TCV in three years.

“Looking forward to the first quarter of 2011, as we consider mixed signals from financial analysts, service providers and industry pipelines, we do not anticipate a significant uptick in the market,” Keppel said.


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