TPI, the largest sourcing data and advisory firm in the world and a unit of Information Services Group, a leader in the information-based services industry, reveals a slowdown in the global outsourcing market in the past three months, but believes that 2008 will still surpass 2007.
The TPI Index for the third quarter of 2008 shows that only 128 contracts were signed globally totaling €11.5 billion – the weakest quarter for total contract value of outsourcing deals in the past six years.
Only one mega deal (a contract valued at €800 million or greater) was signed in the past quarter, compared to more than €7 billion in each of the past three quarters.
However, looking at the data year to date the volume and value of outsourcing contracts is exceeding metrics for 2007 and all indicators, including the recent announcement of the TCS-Citigroup mega deal, suggest that the full year of 2008 is on course for a strong overall result – beating 2007’s total of €68 billion.
Duncan Aitchison, partner and president, TPI EMEA comments, “While the TPI Index reveals a slowdown in outsourcing activity in the past three months, we believe that this is temporary and that 2008 is still set to post strong annual figures, surpassing 2007. Third quarters are traditionally weak, and looking ahead, we see considerable activity in the market.”
While outsourcing activity has been driven primarily by activity in Europe, the Middle East and Africa (EMEA) in recent times, this quarter marked a sharp decline.
In EMEA, 56 contracts totalling almost €4.4 billion were signed in the third quarter of 2008 compared with 75 contracts totalling €14.8 billion during the second quarter.
As a result, looking at global market share, the Americas actually outperformed EMEA in terms of total contract value awarded for the first time in nearly two years.
Duncan Aitchison adds: “It seems likely that the sharp decline in outsourcing in EMEA in the past quarter is a temporary pause following the most intensive nine months of outsourcing activity in the region’s history. We are aware of several large transactions already underway in Europe and, therefore, expect to see a stronger performance in the fourth quarter.”
So far this year, outsourcing in the financial services sector is down in b