The “Prevailing Winds” of FAO Delivery | Market Insights™
March 22, 2014
Offshoring continues to be the predominant delivery model for FAO, but service providers are investing in onshore locations to balance the delivery model
Offshoring continues to be the predominant delivery model for FAO, but service providers are investing in onshore locations to balance the delivery model
RPO providers are increasingly investing in emerging geographies for in-country and/or nearshore/offshore delivery. At an increase of about 20%, Latin America has experienced the most growth, albeit on a smaller base.
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MPHRO new deal buyer adoption trends by signing region, 2013
While RPO experienced strong growth in 2013, development varied by region. Although new deal signing growth was limited in North America, the market grew at 20%+ due to a steep increase in average deal size. Latin America grew by 23% due to a significant uptick in local deal signings in the region. Growth in EMEA and APAC was moderate.
Buyers continue to assess their existing infrastructure portfolios and expect their infrastructure service providers to drive-up productivity levels and deploy next-generation technologies.
As economic challenges in Europe are likely to persist in the near future, growth in the infrastructure services market is expected to remain muted. As a result, service providers’ success will largely depend on their ability to chip away market share from their competitors.
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Third-party Service Integration and Management (SIAM) has emerged as the latest service provider management model in Europe as increasing scale and complexity of technology and global services is pushing some mature buyers to look to outsource the management of their service provider portfolio.
Several factors are driving adoption of third-party SIAM:
In comparison to other geographies, European buyers have been more aggressive in investing in IT infrastructure services in the past several years, with ACVs in 2012 1.7 times the global average. European average contract sizes in 2012 were bolstered by an increased appetite shown by different governments.
US$9 billion up for renewal in European banking and capital markets space
About US$9 billion in large AO contracts are up for renewal by 2016 in Europe (74% of the renewals in banking; 26% in capital markets). The biggest chunk of renewals for banking, 37% of the subsegment total, is in 2014; for the capital markets subsegment, the largest renewal year is 2015, with 42% of the subsegment total.
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