Quarterly Research Report Includes Focus on Eastern European Sourcing Market
DALLAS, May 10, 2012 ─ The global outsourcing and offshoring market saw this year’s first quarter transaction volumes hold steady as the sluggish market witnessed 441 outsourcing deals compared to 433 transactions in fourth quarter of 2011, according to Everest Group, an advisory and research firm on global services. Captive activity decreased slightly in the first quarter with 18 new set-ups compared to 23 in the previous quarter, and there were no divestments. A one-hour webinar will be held May 16, 9 a.m. CDT, to present study findings and insights.
Everest Group’s Market Vista: Q1 2012, a quarterly report on global outsourcing and offshoring activity, reports first quarter global transaction volumes reached about US$3 billion in annual contract value (ACV), an increase of 11 percent over the previous quarter. Compared to Q4 2011, the market saw a 9 percent increase in Business Process Outsourcing (BPO) transactions while IT Outsourcing (ITO) transaction volumes remained the same. New transactions accounted for 83 percent of all deals signed during the quarter. Two mega deals, each valued at over US$1 billion in total contract value (TCV), were signed during the quarter.
“Until the world economy gains more stability, we foresee the global services market will hold a steady course in terms of transaction volumes, captive set-ups and other activity,” said Eric Simonson, managing partner of Research. “If you set aside mega deals and look at annual contract and total contract volumes, the numbers are lower than we used to see in a more vibrant market, which is indicative of cautious buyer behavior and more adoption of phased-in approaches.”
Other first quarter 2012 findings include:
- Compared to Q4 2011, the BFSI (banking, financial services and insurance) sector led the market in transaction volumes with an increase of 12 percent while the MDR (manufacturing, distribution and retail) vertical saw a 9 percent increase. Transaction increases also were recorded for public sector, energy and utilities, and telecom verticals, but the healthcare vertical saw a large drop in deals signed during the quarter.
- Transaction volumes decreased in North America, held steady in the United Kingdom and increased significantly in Rest of Europe.
- India and Rest of Asia each saw six captive set-ups followed by four in Europe and two in Latin America.
- Offshore activity saw 30 delivery centers established across captives and service providers in the first quarter compared to 29 in the previous quarter. Significant activity occurred in Asia, Latin America and Eastern Europe.
- Service providers’ consolidated revenues and margins increased in Q4 2011 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, captive landscape, current and emerging locations and 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 (manufacturing, distribution and retail), healthcare, energy and utilities, technology, and telecom sectors.
The report also includes these focus sections:
- Eastern Europe: analysis of labor arbitrage sustainability, operating costs, operating cost inflation, arbitrage sustainability and currency trends. Cities profiled include Prague and Brno, Czech Republic; Budapest, Hungary; Sofia, Bulgaria; Bratislava, Slovakia; and the cities of Warsaw, Krakow and Poznan in Poland.
- Location optimization insights include a focus on domestic sourcing from tier-3/4 cities in the United States; emergence of Jordan as an alternative sourcing location in the Middle East; increased interest in business districts located in the periphery of tier-1 Indian cities; implications of recent changes in Indian government policies and regulations on offshore services industry; and rising prominence of Central American locations 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, 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 May 16, 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: Q1 2012 report or other research services, please visit research.everestgrp.com, e-mail [email protected]rp.com or call +1-214-451-3110.