Outsourcing Market Posts Second-Best Third Quarter On Record

STAMFORD, Conn., Oct. 16, 2012 /PRNewswire/ -- Information Services Group (ISG) (NASDAQ: III), a leading technology insights, market intelligence and advisory services company, today released data showing the global outsourcing market turned in its second-best third quarter on record but dipped year-over-year and sequentially due to difficult comparisons.

The 3Q12 Global TPI Index, which measures commercial outsourcing contracts with an annual contract value (ACV) of $5 million or more, totaled $4.8 billion, the second-highest third-quarter total on record but a decline of 6 percent from the third quarter of 2011 and 10 percent from the second quarter of 2012. Excluding the Atos-Siemens mega-deal awarded a year ago, third-quarter ACV would have been up 18 percent year-over-year.

Through the first three quarters of 2012, ACV has grown 3 percent to $14.8 billion, led by the ongoing surge of outsourcing activity and contract values in Asia Pacific, a continued climb in the value of contracts for business process outsourcing (BPO) globally, and an increase in large contract activity, especially in emerging markets. The number of mega-relationships, defined as contracts with an ACV of $100 million or more, is up 100 percent year-to-date and has already exceeding the full-year total from 2011.

"These results bear out our prior expectation that the second half of 2012 would improve upon the first," said John Keppel, Partner & President, Research and Managed Services, ISG. "Third quarters are typically the weakest of the year, but the global market continues to build momentum in key segments."

The TPI Index, presented by ISG, provides a quarterly snapshot of the sourcing industry for clients, service providers, analysts and the media. For more than a decade, it has been the industry's authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider metrics.

By scope, the ACV of contracts for BPO totaled $1.6 billion during the third quarter, a rise of 12 percent from the same quarter a year ago but a decline of 32 percent from the quarter before. Year-to-date ACV of $5.6 billion is up 17 percent, driven by larger awards in functional domains such as industry-specific BPO and Facilities Management.

IT outsourcing (ITO) ACV of $3.2 billion fell 13 percent year-over-year but rose 8 percent sequentially. Year to date, $9.2 billion in ITO ACV has been awarded, a decline of 3 percent. However, ITO totals in both the Americas and Asia Pacific are up by double-digit percentages.

By region, Asia Pacific continued to turn in the strongest overall growth in 2012. During the third quarter, the region's ACV totaled nearly $700 million, up 55 percent year-over-year but down 51 percent sequentially. Year-to-date ACV of $2.5 billion rose 72 percent over 2011, with China, India and Southeast Asia all experiencing robust growth.

In the Americas, $1.6 billion in ACV was awarded, a drop of 11 percent year-over-year and 8 percent sequentially. In Europe, the Middle East and Africa, $2.5 billion in ACV was awarded in the third quarter, a decline of 12 percent year-over-year but a rise of 14 percent sequentially.

Said Keppel: "The third quarter got the second-half resurgence we predicted off to a promising start. We anticipate improvement in the fourth quarter, with help from some larger deals that are ready to go to award. For the full year, the market should meet or exceed its 2011 performance of almost $20 billion in ACV."

ISG presented the 3Q12 Global TPI Index during a conference call for media and analysts today. To listen to an audio replay of the call and view presentation slides, please visit http://www.isg-one.com/web/research-insights/tpi-index/.

About Information Services Group
Information Services Group (ISG) (NASDAQ: III) is a leading technology insights, market intelligence and advisory services company, serving more than 500 clients around the world to help them achieve operational excellence. ISG supports private and public sector organizations to transform and optimize their operational environments through research, benchmarking, consulting and managed services, with a focus on information technology, business process transformation, program management services and enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, the deepest data source in the industry, and more than five decades of experience of global leadership in information and advisory services. Based in Stamford, Conn., the company has more than 700 employees and operates in 21 countries. For additional information, visit www.isg-one.com.

SOURCE Information Services Group (ISG)

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

440k+
Newsrooms &
Influencers

9k+
Digital Media
Outlets

270k+
Journalists
Opted In

GET STARTED