Mid-size deals drive business process outsourcing
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Mid-size deals drive business process outsourcing

Monday, 31 January 2005, 08:00 Hrs
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MUMBAI: The global technology outsourcing business is increasingly being driven by mid-size deals as competition heats up in the sector with the entry of a large number of new players, says a study report.

But top-tier Indian offshore companies such as Tata Consultancy Services and Infosys Technologies are still winning large deals against their Western rivals, said the study conducted by London-based IT marker research firm Datamonitor.

According to Datamonitor, the value of outsourcing deals in 2004 grew 37 percent, reflecting a steady recovery in the IT services market. IBM Global Services captured the largest market share of 10.7 percent.

There were, however, fewer mega billion-dollar deals in 2004 than in the previous year, said the report.

While 2003 saw 29 billion-dollar deals in the technology outsourcing space in the global market, in 2004 only 25 such contracts were signed.

The decline has been attributed to adoption of "selective sourcing models" by clients in the services sector, where they outsource specific IT and back office functions to specialist outsourcing vendors.

"One striking feature of the services market in 2004 was that the deals were distributed among a larger number of vendors than in previous years," said Nick Mayes, lead analyst (global computing services) at Datamonitor.

The ten offshore companies with the large market shares of contracts tracked in 2004 by value accounted for 57 percent of the total. This compares to 68 percent in 2003 and 70 percent in 2002.

"We are seeing increasing competition from a variety of firms that are beginning to win deals that were traditionally won by those in the top ten vendors," said Michel Janssen, president at Everest Group, a global tech consultancy major.

"Looking further down the road, we are also seeing the top tier offshore vendors such as TCS, Infosys, and Wipro compete, and win, in head-to-head deals against top tier Western vendors - and the wins are increasingly larger in size."



Source: IANS
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