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Global outsourcing weakens as contract values and numbers decline
By siliconindia
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Monday, 17 November 2008, 16:52 IST
New Delhi: The quarter ended September 2008 saw a decline in the value and numbers of outsourcing contracts inked, thanks to the weakness of financial service market and the ongoing recessionary trend. During the quarter-3, outsourcing contracts worth $ 14.4 billion in Total Contract Value (TCV) were signed, there is a 50 percent drop compared to the previous quarter. The number of outsourcing contracts stood at 128, with a 22 percent decline over the last quarter.
Though the third quarter is traditionally considered as the weakest quarter of the year, this year's third quarter saw a decline which was lower than historical average by almost 20 percent, according to the TPI Index, TPI is a sourcing data and advisory firm.
Siddharth A. Pai, Partner & Managing Director, TPI India said, "The share of Indian service providers in the industry-wide contracts remained almost steady at 11 per cent. Overall, the Q3 2008 has been the weakest in 10 years."
The quarter didn't witness many mega contracts in which the Annualised Contracts Value (ACV) is over $100 million, apart from only one mega deal with TCV over $1 billion.
Performance in Europe, the Middle East and Africa declined significantly in TCV levels compared with recent quarters and there was a dramatic drop in Information Technology outsourcing contract value compared with the first two quarters. However, despite the softness in Q3, the 2008 year-to-date numbers and value of outsourcing contracts exceed metrics of 2007.
Anticipating a strong fourth quarter award values, TPI said the current crisis is likely to introduce softness in outsourcing contract awards entering 2009.
