World’s IT outsourcing in Q2

According to TPI, outsourcing marked contracted by 18% to US US$16.4 billion in the second quarter, which is 21% lower than in Q1. The main reason – decreased demand in the Americas and drop in the number of large contracts. However, current contract pipelines suggest an improvement in global TCV (total contract value) for the remainder of the year.

At the same time there was growth by 13% in Europe and by 55% in Asia Pacific. Besides, restructirings (contacts that are renewed, restructures or renegotiated) brought 30% growth compared to the same quarter one year ago.

What’s interesting, is that TCV has lost 20% compared to last year, but the total amount of contracts showed only 1% decrease. Our vision is that general number of world’s outsourcing contracts is only growing, but those contracts migrate from expensive destinations (like Canada, UK and USA) to cheaper ones (Asia, Africa nad Estern Europe). The decrease in large contracts can be explained by diversified strategy of the big players, who want to mitigate risks of contracting with unstable Third World countries and split big contracts to smaller parts to spread within various destinations.

About the research. In its 35 th consecutive quarter, the TPI Index provides a quarterly snapshot of the sourcing industry for clients, service providers, analysts and the media. It is the industry’s authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider metrics. It considers contracts with TCV above $25 million.

Source: Softheme Blog

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