Telco-to-Telco Deals Fuel Record Third Quarter for Outsourcing
20 Octobre 2009 - 5:49PM
PR Newswire (US)
Excluding small number of contracts for Network Operations
Outsourcing, global market maintained slower pace of previous four
quarters 3Q09 Global TPI Index reveals mega-deal resurgence, steady
demand for IT outsourcing, rapid growth in Asia Pacific HOUSTON,
Oct. 20 /PRNewswire/ -- TPI, the largest sourcing data and advisory
firm in the world and a unit of Information Services Group, Inc.
(ISG) (NASDAQ:IIINASDAQ:IIIIUNASDAQ:IIIIW), an industry-leading
information-based services company, announced today that the global
outsourcing market experienced its strongest third quarter on
record but that results would have been substantially more muted
without a handful of large contracts between telecommunications
companies. The 3Q09 Global TPI Index, which tracks commercial
contracts valued at $25 million or more, recorded 139 transactions
during the just-completed quarter with a total contract value (TCV)
of $24.7 billion. It was the highest quarterly TCV since the fourth
quarter of 2008 and represented an increase of 21 percent over
second quarter 2009 and 40 percent over third quarter 2008.
However, excluding five transactions in which telecommunications
carriers outsourced network operations to telecommunications
service providers, TCV reached only $17.2 billion, roughly in line
with the slower pace of the past four quarters. The market's
year-to-date TCV of $62.6 billion remains 10 percent below the same
point last year with the Telco-to-Telco contracts and 23 percent
lower when they are excluded. A brighter picture could be seen in
mega-deals, those contracts worth $1 billion or more. Mega-deal TCV
reached $13.7 billion in the third quarter, the highest total since
the fourth quarter of 2002. Excluding Telco-to-Telco contracts,
four mega-deals were signed, the same amount in the last three
quarters combined. The 11 mega-deals signed year-to-date falls
within range of recent years, but their more than $19 billion of
TCV is the highest total since 2005. "The outsourcing market's
record third quarter wouldn't have been possible without a small
number of significant Telco-to-Telco contracts," said Mark Mayo,
Partner and President, TPI Global Resource Management.
"Nonetheless, even without those deals, the TPI Index showed solid
sequential improvement in TCV, steady demand for IT outsourcing,
considerable growth in Asia Pacific and the best showing for
mega-deals in more than a year." The Global TPI Index provides a
quarterly snapshot of the sourcing industry for clients, service
providers, analysts and the media. Now in its 28th consecutive
quarter, it is the authoritative source for marketplace
intelligence related to outsourcing transaction structures and
terms, industry adoption, geographic prevalence and service
provider metrics. OVERVIEW Until recently, Network Operations
Outsourcing, a unique scope of work performed by a small sub-set of
the industry, has proven more popular outside the U.S.,
particularly in Western Europe and Asia Pacific. But in the third
quarter of 2009, it accounted for $7.5 billion of TCV -- more than
30 percent of the broader market's value. The impact of that
activity was isolated in the IT outsourcing (ITO) segment. The TCV
of the 94 ITO contracts awarded in the quarter reached $20.1
billion, a 14 percent jump from the prior quarter and the highest
total since the fourth quarter of 2003. Year-to-date, ITO TCV is up
4.5 percent from the same point a year ago. When Telco-to-Telco
contracts are excluded, however, TCV was flat with the second
quarter and is down 12.6 percent year-to-date. Demand for business
process outsourcing (BPO) remained lackluster in the third quarter
as companies found it easier to pursue ITO contracts in the current
economic climate than pursue large transformations of their Finance
& Accounting or Human Resources functions or the Facilities
Management and Financial Services Outsourcing deals that were
popular last year. Year-to-date, BPO TCV is down 45 percent
compared to the same point in 2008 and the number of contracts is
off 25 percent. REGIONS AND INDUSTRIES The 3Q09 Global TPI Index
showed significant differences in outsourcing market performance by
region of the world. Asia Pacific, which is solidifying its
position in the global market, awarded 24 contracts valued at $6.4
billion, a second consecutive strong quarter for TCV in the region
and the third out of the last four in which it topped $5 billion.
Year-to-date, the number of contracts in Asia Pacific has increased
about 12 percent while TCV has grown 120 percent, 64 percent
without Telco-to-Telco contracts. In the Americas, 47 contracts
valued at almost $12 billion were awarded in the third quarter, up
sequentially more than 100 percent on the strength of
Telco-to-Telco activity. The Americas has not seen as strong a
quarter for TCV since the fourth quarter of 2008. So far this year,
$23.8 billion in TCV has been awarded in the region, the best since
2006, but without the Telco-to-Telco deals, it is down 8.5 percent.
In Europe, the Middle East and Africa (EMEA), 68 contracts valued
at $6.5 billion were signed in the third quarter, up modestly by
number but down about 4 percent from the same quarter a year ago.
Year-to-date, TCV in the region is down more than 40 percent from
2008, with or without Telco-to-Telco contracts. The 3Q09 Global TPI
Index also found substantial differences in the adoption of
outsourcing by certain industry categories. Verticals demonstrating
increased momentum so far in 2009 include Telecommunications,
Diversified Financials, Transportation and Utilities. Outsourcing
activity in the Healthcare Equipment and Services has also
quickened as recessionary pressure as well as the current political
focus on Healthcare reform in the U.S. has driven a 27 percent rise
in contract awards year-to-date. OUTLOOK "The third quarter showed
an unprecedented surge in Telco-to-Telco contracts and continued
stabilization in the rest of the market, and this occurred in a
quarter that is seldom the best quarter of any given year," Mayo
said. "Our day-to-day observations suggest that pent-up demand
underlies a market that has been deferring decisions in an economic
recession. Based on this, we think the market will begin to turn
upward over the next six to nine months." To learn more and view
presentation slides from the 3Q09 Global TPI Index conference call,
please visit http://www.tpi.net/knowledgecenter/tpiindex/. About
TPI TPI, a unit of Information Services Group, Inc. (ISG)
(NASDAQ:IIINASDAQ:IIIIUNASDAQ: IIIIW), is the founder and innovator
of the sourcing advisory industry, and the largest sourcing data
and advisory firm in the world. We are expert at a broad range of
business support functions and related research methodologies.
Utilizing deep functional domain expertise and extensive practical
experience, our accomplished industry experts collaborate with
organizations to help them advance their business operations
through the best combination of business process improvement,
shared services, outsourcing and offshoring. In addition, TPI
Momentum, a business unit of TPI, provides information and insights
to outsourcing and offshoring service providers to help them
provide enhanced services to their sourcing clients. In 2009, TPI
is celebrating its 20th anniversary. For additional information,
visit http://www.tpi.net/. About Information Services Group, Inc.
Information Services Group, Inc. (ISG)
(NASDAQ:IIINASDAQ:IIIIUNASDAQ:IIIIW) was founded in 2006 to build
an industry-leading, high-growth, information-based services
company by acquiring and growing businesses in advisory, data,
business and media information services. In November 2007, the
company acquired TPI, the largest independent sourcing advisory
firm in the world. 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 more, visit
http://www.informationsg.com/. DATASOURCE: TPI CONTACT: Todd
Miller, TPI, +1-480-235-7018, ; or Rhena Wallace, Cohn & Wolfe
for TPI, +1-212-537-8014, Web Site: http://www.tpi.net/
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