The global outsourcing market cranked out its best performance in six quarters as the Total Contract Value (TCV) spiked 47 per cent sequentially to $24.7 billion during fourth quarter ended December 2009, according to sourcing data and advisory firm TPI.
But the stellar performance in the just-concluded quarter could not blunt the impact of weak showing in the first half of 2009, and the TCV for the full year (2009) fell 13 per cent to $74.5 billion ¨C the lowest since 2001.
TPI said that a slow but steady recovery was under way as businesses commit to long-term strategies to reduce costs and streamline operations. The pipelines are healthier and more stable than a year ago.
Telcos excluded
The latest TPI Index, which measures commercial outsourcing contracts valued at over $25 million, showed that the market TCV (involving actual award over lifetime of the contract) during Q4 was eight per cent up over the year ago period. But this time (unlike the third quarter), TPI has not taken into account the telco-to-telco deals, and so the TCV value reflects IT/BPO outsourcing contracts.
When contacted, Mr Siddharth Pai, Partner and Managing Director at TPI India, said, ˇ°Telco-to-telco deals are more specialised and niche and have been excluded from the TCV numbers this time.ˇ±
In Q4, the outsourcing market was fuelled by strong demand for IT outsourcing and a regional surge in Europe, West Asia and Africa
ˇ°The outlook for building on its second-half momentum is positive,ˇ± said Mr Mark Mayo, Partner and President, Global Operations, TPI.
During the quarter, IT outsourcing activity continued to drive the broader market, as it had through the year - TCV rose 54 per cent over the prior quarter and 32 per cent over a year ago to $19 billion, the highest quarterly total in six years. But the market for BPO continued to struggle in Q4 - while TCV increased almost 29 per cent sequentially, it remained 33 per cent below the same period 2008. For 2009, BPO TCV declined 38 per cent to $18.5 billion.
In the Americas, TCV rose just over four per cent over the previous quarter, but remained off by 17 per cent year-over-year. Despite the growth in Latin America, full-year TCV in the region declined six per cent to $27 billion. The service provider landscape also continued to shift here due to significant consolidation and gains by India-heritage firms, which now comprise nearly one-third of the top players, said TPI.
In EMEA, several large transactions boosted fourth-quarter TCV 135 per cent sequentially and 60 perc ent year-over-year to $15.4 billion, marking its best performance since the second quarter of 2008.
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