The outsourcing market appears to be weakening as the number of signed contracts during this year’s July-September period dwindled to 472, compared to 503 deals posted by last year’s Q3 and 516 contracts of 2011’s Q2, according to advisory and research firm Everest.
Amneet Singh, Vice President (Global Sourcing) at Everest, said the decline in global transaction volumes indicates a slowdown in outsourcing activity. However, even if there were fewer contracts this year, the global transaction volumes amounted to USD 2.7 billion in annual contract value (ACV) for this year’s third quarter mainly because of large contracts.
Meanwhile, the number of valid transactions in IT outsourcing and BPO markets decreased by seven percent and 12 percent, accordingly. Nevertheless, IT outsourcing’s ACV was up 14 percent during Q3 2011, whereas BPO decreased by 50 percent.
Everest stated in its Market Vista report that some of the sectors which contributed significantly are the Banking Financial Services and Insurance (BFSI) sector and manufacturing, distribution, and retail (MDR) segment. Contracts from the public sector decreased by 31 percent in volume and 48 percent in ACV.
On the other hand, the number of captives increased in Q3 with 20 new centers, compared to only four captive centers and nine expansions during the same period of last year.