Quarterly Research Report Includes Focus on Latin American Sourcing Market
DALLAS, August 8, 2012 – The global services market saw transaction volumes decline in the second quarter of this year, following a declining trend observed over the previous four quarters, according to Market Vista: Q2 2012, a quarterly market report by Everest Group, an advisory and research firm on global services. A one-hour webinar will be held August 22, 9 a.m. CDT, to present study findings and insights.
Market Vista: Q2 2012, which analyzes global outsourcing and offshoring activity contracts irrespective of contract value, found second quarter transactions and annual contract volumes fell 7 and 25 percent compared to the first quarter, respectively. The market witnessed 411 outsourcing deals in the second quarter, compared to 441 during the first quarter, and global transaction volume reach about US$2.2 billion in annual contract value (ACV). Compared to the first quarter of the year, Business Process Outsourcing (BPO) transaction activity dropped 19 percent while IT Outsourcing (ITO) transaction volumes fell 3 percent.
“A sluggish global economy and the relatively conservative approach of buyers continue to have an impact on the global services market,” said Eric Simonson, managing partner of Research. “Buyers are taking advantage of increased provider competition in a tough market by negotiating shorter contract commitments at competitive prices.”
Other second quarter 2012 findings include:
- The second quarter saw 54 major deals, each valued at over US$50 million in total contract value (TCV), two of which were valued at over US$1 billion in TCV.
- Compared to the first quarter of the year, the public sector (government and defense) accounted for one-fourth of total transactions, an increase of 22 percent in ACV and most of the ITO contracts during the quarter.
- The BFSI (banking, financial services and insurance) sector, holding almost one-fifth of market share, continued to lead the market in transaction volumes with overall ACV increasing 61 percent compared to the first quarter of the year. The MDR (manufacturing, distribution and retail) vertical, with 17 percent market share, saw a 3 percent increase in transaction volume and 44 percent decline in ACV compared to the previous quarter.
- Transaction volumes continued to decline in major markets such as North America and Western Europe but picked up in other geographies including Australia, Brazil and India.
- Set-ups of Global In-house Centers (GICs) were balanced between Europe, India and Asia-Pacific while Latin America and Africa experienced limited activity.
- Location activity increased significantly as 47 new delivery centers were established across GICs and service providers, including a notable spike in set-ups in tier-2/3 locations, particularly in Asia.
- Service providers’ consolidated revenues and margins fell in the first quarter of 2012 compared to the previous quarter (Financials lag other service provider activity by one quarter).
Everest Group’s quarterly Market Vista reports provide data and analysis of deal trends in the outsourcing and offshoring market, the GIC landscape, and current and emerging locations, as well as key service provider intelligence insights. Everest Group’s industry trends research complements the Market Vista reports through quarterly updates focused on industry-specific global sourcing data, developments and insights across the BFSI, MDR, public sector, healthcare, energy and utilities, technology and telecom sectors.
The report also includes these focus sections:
- Latin America: analysis of labor arbitrage sustainability, operating costs, operating cost inflation, arbitrage sustainability and currency trends. Cities profiled include Buenos Aires, Argentina; Rio de Janeiro and Sao Paulo, Brazil; Santiago, Chile; Mexico City and Monterrey, Mexico; and San Jose, Costa Rica.
- Location optimization insights include a focus on emerging delivery center locations Bulgaria, Romania, South Africa and Vietnam; macroeconomic uncertainty and policy instability in Argentina; attractive incentives and declining operating costs boosting South Africa as attractive proposition for voice support for Europe; and rising prominence of Costa Rica for voice and non-voice BPO.
Quarterly Market Vista reports comprise key developments among 20 leading global service providers. Traditional service provider profiles include Accenture, Xerox, AON-Hewitt, Atos, Capgemini, Convergys, CSC, HP, IBM, Dell Services and Unisys. Offshore-centric service provider profiles include Cognizant, EXL, Genpact, HCL, Infosys, Mahindra Satyam, Tata Consultancy Services, Wipro and WNS.
The webinar will be held August 22, 9 a.m. CDT; 2 p.m. GMT Standard Time. To register, please visit: research.everestgrp.com/Events/Webinars.
Market Vista is a subscription service with four reports published per year, including location datasets, Breaking Viewpoint briefings, Market Vista Primer and Global Locations Insights newsletter. For information about the Market Vista: Q2 2012 report or other research services, please visit research.everestgrp.com, e-mail [email protected] or call +1-214-451-3110.