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Global Outsourcing Activity Report

by: Sarah Joson

Tuesday, January 21, 2014 | Outsourcing News |

Information Services Group (ISG), a market intelligence and consultancy firm, recently released a general report on the global outsourcing industry’s activities for 2013 called the ISG Outsourcing Index.

Data from the report included findings on deals with annual contract value (ACV) reaching $5 million or more awarded in the last quarter of 2013 increased 13 percent, but the total ACV decreased 12 percent to $4.6 billion. For the entire year, the volume of closed deals climbed two percent, but values dropped 18 percent to $18.7 billion. 2013 accrued 1,155 contracts in total – 309 of which were awarded in the fourth quarter.
ISG notes that global outsourcing activity was strong during the fourth quarter, but then again, contract value continued to fall as buyers are now moving towards smaller deals. 

Slowdown in global outsourcing activity

Some of the reasons ISG found that have contributed to the drop in value are the decrease in number of mega deals (deals with ACV of $100 million and up), the slowdown in activity within the manufacturing industry, as well as financial services and overall weakness in the business process outsourcing (BPO) sector.

According to John Keppel, President of ISG, the figures they have reported are consistent with the organization’s initial predictions where the fourth quarter of 2013 was not able to recover the poor performance of 2013’ first half. However, for the long-term standpoint, the figures are in proportion to the pre-recession market levels. He added that they are starting to see a shift in demand for sourcing as economies are recovering from recession. He said outsourcing was once a tool used to take advantage of labor arbitrage during the economic downturn, and now, it is used to improve strategies for growth models.

It was also found that activity in contract restructuring increased 22 percent as more enterprises are moving towards multisourcing with short-term contracts. Information technology outsourcing (ITO) also climbed eight percent, specifically in the applications development and maintenance (ADM) segment.  Activity in the EMEA region was also noticeable as contract volume jumped 18 percent – but in smaller average-sized deals.



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