DALLAS ─ The outsourcing and offshoring market witnessed continued trends of global recovery as evidenced by sustained global transaction activity led by buyers in the United States and Europe, continued captive growth, increased hiring by leading Indian suppliers, and other indicators, according to the Market Vista: Q4 2009 report by Everest, a global consulting and research firm. Everest’s quarterly study on global outsourcing and offshoring activity reports transaction volume in the fourth quarter was similar to the third quarter, but a few mega-deals pushed annual contract value (ACV) up 72 percent to about US $4 billion.1
A one-hour Webinar will be held Feb. 17, 8 a.m. CDT, to present study findings and insights. Additionally, the discussion will include emerging trends and outlook of the Filipino BPO industry with guest panelists from the Commission on Information and Communications Technology (CICT) and the Business Processing Association of the Philippines (BPA/P).
Comparing Q4 to Q3 2009, the report includes the following findings:
- Business process outsourcing (BPO) comprised 26 percent of deals signed in Q4 with increases of 12 percent in transaction volume and 25 percent in ACV.
- IT outsourcing (ITO) held 71 percent of transaction activity; deal volume remained steady and ACV rose 21 percent.
- Deals with both ITO and BPO components drove the ACV significantly in Q4 on account of a few mega-deals of this nature.
- The BFSI (banking, financial services, insurance) and MDR (manufacturing, distribution, retail) verticals contributed towards about one-third of deal signings.
- The BFSI vertical witnessed a marginal decrease in overall transaction volumes but contributed towards one-sixth of overall market ACV. Half of the BFSI deals were inked by banks, which constituted an equal proportion of the ACV as well.
- In the MDR vertical, contract signings resembled Q3 activity, but ACV increased 44 percent.
- North America and Europe again contributed towards three-fourths of total transaction signings in Q4, with the ACV increasing significantly in the United Kingdom.
- Captive activity in Q4 reached a two-year high, led by MDR and BFSI verticals, with 40 new announcements led by 14 in India and 18 in Rest of Asia.
- Both Tier-I and Tier-II locations contributed equally towards overall offshore delivery (i.e., both captive and third-party centers).
- Overall supplier transaction activity held steady and improved for traditional global majors and declined for offshore centric-suppliers. M&A activity saw 10 acquisitions and 39 new alliances.
“Recovery continues to be slow and steady, but the global sourcing market is turning the corner as buyers are out of the reactive mode and now able to once again focus forward on proactive measures to reach long-term business objectives,” said Eric Simonson, Managing Principal of Research, Everest. “The last half of 2009 saw signs of recovery momentum with transaction volumes holding steady. Although we saw ACV levels rise sharply due to a handful of mega-deals, we’re still seeing buyers sign bite-sized deals as well.”
Everest’s quarterly Market Vista reports provide data and analysis of deal trends in the outsourcing and offshoring market, captive landscape, current and emerging locations, key supplier intelligence insights, and key developments across the top 20 financial services companies globally.
The Market Vista Q4 report also includes focus sections on:
- Emerging geography profiles of South Africa, Vietnam, Turkey, Thailand, Guatemala, El Salvador, Ukraine, Egypt and Mauritius
- Location optimization insights include hiring increases in India, tax incentives in Buenos Aires, impact of European Union VAT regulations, and cost arbitrage factors in the United States, Brazil, Poland, Philippines and India
- 2009 Year in Review of Supplier Developments
Quarterly Market Vista reports include key developments among 20 leading global suppliers. Traditional supplier profiles include Accenture, ACS Xerox, Atos Origin, Capgemini, Convergys, CSC, Hewitt, HP, IBM, Dell Perot Systems and Unisys. Offshore-centric supplier profiles include Cognizant, EXL, Genpact, HCL, Infosys, Mahindra Satyam, Tata Consultancy Services, Wipro and WNS.
The Webinar will be held Feb. 17 at 8 a.m. CDT; 2 p.m. GMT Standard Time. Special guest panelists will be Secretary Ray Anthony Roxas-Chua III, Chairman, Council on Information and Communications Technology, Office of the President of the Philippines; and Oscar Sañez, President and Chief Executive Officer, Business Processing Association of the Philippines (BPA/P). To register, please visit: research.everestgrp.com/Events/Webinars.
Market Vista is a subscription service with four reports published per year, now enhanced to also include location datasets, Market Vista Primer and Global Locations Insights newsletter. For information about the Market Vista: Q4 2009 report or other research services, please visit research.everestgrp.com, e-mail [email protected] or call +1-214-451-3110.