TPI: Sourcing Strategies Still in Flux Across Industries

New research report shows spending in key verticals motivated by client need for transformation, best-of-breed service, hard business benefit

Despite headwinds, Global 2000 outsourcing penetration up 3 percent to 39 percent

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TPI

Sep 01, 2011, 05:01 ET

STAMFORD, Conn., Sept. 1, 2011 /PRNewswire/ -- TPI, an Information Services Group company (ISG) (NASDAQ: III) and the leading independent sourcing data and advisory firm in the world, today announced the results of new research showing that across the Global 2000, sourcing strategies continue to shift in response to volatile business conditions.

The TPI Momentum® 2011 Market Trends & Insights Vertical Industries Report, which documents sourcing trends in the Forbes® vertical categories, finds that 11 of the 27 sectors experienced double-digit changes in outsourcing spending last year. Among the industries in which spending shifted 10 percent or more from the previous year were Conglomerates, Oil & Gas Operations, Diversified Financials and Transportation.

The report notes that in addition to changing how much they spend, companies are changing how they spend, motivated by business transformation and a desire to work with best-of-breed service providers while still maintaining their focus on cost reduction. Outsourcing clients continue to be very careful with expenditures and are increasingly asking service providers to commit to hard business benefits from their outsourcing projects.

"Business conditions are improving in many, but not all, verticals, while in others, outsourcing opportunities are clarifying and new strategies are emerging," said Paul Reynolds, Chief Research Officer, TPI Momentum. "Outsourcing spending is being impacted by everything from new strategic drivers and new regulations to changing attitudes about offshoring and emerging technologies such as cloud computing."

Despite these headwinds for service providers, and declining contract values as noted by the TPI Index, outsourcing penetration among all Global 2000 companies grew 3 percent to 39 percent in 2010, the report notes. More than 80 companies were first-time outsourcers, indicating rising opportunities for new customer acquisition. The vertical sectors with the highest percentages of first-time outsourcing clients were Construction, Materials and Utilities.

"This is a good indication that companies across industries are turning to outsourcing for the first time in search of business benefits that insourcing cannot produce," Reynolds said.

The TPI Momentum 2011 Market Trends & Insights Vertical Industries Report presents current spending in each industry category augmented with historical data plus observations from TPI Advisors based on their hands-on experience with outsourcing clients. For the first time, the report also presents spending in major sub-verticals alongside vertical and aggregate data.

For more information, visit http://www.tpi.net/web/services/momentum/ or contact [email protected].

About TPI

TPI, an Information Services Group company, is the founder and innovator of the sourcing advisory industry and the leading independent sourcing data and advisory firm in the world. TPI advisors are expert at a broad range of business support functions and related research methodologies. Drawing on their deep functional domain expertise and extensive practical experience, they collaborate with organizations across all major industries to help them advance their business operations through the best combination of business process improvement, shared services, outsourcing and offshoring. For additional information, visit www.tpi.net.

About Information Services Group

Information Services Group (ISG) (NASDAQ: III), founded in 2006, is a leading technology insights, market intelligence and advisory services company. ISG has three go-to-market brands: TPI, the leading independent sourcing data and advisory firm in the world; Compass, the premier independent global provider of business and information technology benchmarking, performance improvement, data and analytics services; and STA Consulting, a premier independent information technology advisor serving the public sector. The company has nearly 700 employees and operates in 21 countries. Based in Stamford, Conn., ISG has a proven leadership team with global experience in information-based services and a track record of creating significant value for shareowners, clients and employees. For additional information, visit www.informationsg.com.

SOURCE TPI