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TPI Index Reveals Outsourcing Demand in Asia Pacific Contributing to Record-Setting Global Growth
Asia Pacific sees Nearly 10 Percent Increase in the Number of Outsourcing Contracts
Houston, United States -- (Business Wire India) -- Wednesday, July 23, 2008 11:59:23 AM
TPI, the largest sourcing data and advisory firm in the world and a unit of Information Services Group Inc. (ISG) (NASDAQ:III) (NASDAQ:IIIIU) (NASDAQ:IIIIW), an industry-leading, information-based services company, released the latest TPI Index, which tracks commercial outsourcing contracts valued greater than $25 million. The Index reveals a continued growth in the number of outsourcing contracts in Asia Pacific, driven by telecommunications and financial services contracts signed in India, despite a sharp decline in the value of these contacts as compared to those signed in 2007.
For the first half of 2008, Asia Pacific saw a 9 percent increase in the number of contracts signed. However, in a year-over-year comparison, the region also saw a 44 percent decline in total contract value (TCV), and a 49 percent decline in annualized contract value (ACV), or the value of a contract divided by its duration. According to TPI's analysis, the decline in the value of contracts in Asia Pacific is the result of the lack of mega deals - contracts in which the TCV is $1 billion or greater - and limited number of mega relationships - contracts with an ACV of $100 million or more - during the first half of 2008. In comparison, Asia Pacific signed nine mega relationships in 2007, which assisted in producing the robust TCV and ACV for that year.
TPI's analysis also shows that the decline in the number of mega relationships is a return to the historical norm for the region, suggesting that the nine signed in 2007 represented an anomaly in the region. Asia Pacific will need a surge of mega deals and mega relationships in the second half of 2008 to reach 2006 levels or the high-water mark in 2007, as well as to continue year-over-year growth in TCV and ACV for the region.
Looking at market trends on a global scale, the market momentum in new contract awards is unprecedented. The first half of 2008 finished as one of the strongest in more than a decade with 282 contracts, valued at over $49 billion in TCV and nearly $10 billion in ACV awarded. The market trends seen in Asia Pacific were similar to those in the Americas, which also showed a decline in TCV and ACV due to a decrease in mega deals. Europe, the Middle East and Africa (EMEA), however, saw a 58 percent surge in TCV, which can be attributed to the 10 mega deals it has seen to date in 2008.
"The growth in the number of contracts we've seen this year in Asia Pacific and worldwide is a direct response to today's softening business climate," said Arno Franz, partner and managing director, Asia Pacific, TPI. "As companies take steps to reduce operational costs, they rely on outsourcing to help them achieve this goal. Outsourcing demand has been strongest in times of economic contraction as well as in periods of economic expansion, when companies look to increase capacity and capability most effectively."
Looking at the performance of specific industries, telecom and financial services retain the largest combined percentage of the Asia Pacific market with 76 percent of the activity, driven by a strong performance in India. Despite the decline in TCV and ACV in the region, telecom is still notably strong, accounting for more than 50 percent of TCV in Asia Pacific compared with 35 percent of the global TCV. However, while telecom and financial services maintained a large portion of the market share for the first half of 2008, the number and TCV of these contracts was down in Asia Pacific compared to 2006 and 2007. The number and value of financial services contracts were also down in EMEA and the Americas.
BPO contracts accounted for 24 percent of the work done in Asia Pacific; however, the region is still relatively focused on ITO, which represented approximately three quarters of the number of contracts and 83 percent of the TCV. While the BPO market in Asia Pacific is smaller relative to BPO's performance in other regions, the region did see a continued momentum in contact center services. In addition, India continued to drive growth in the region, occupying the largest portion of the market share, with Australia having the second largest.
For more information on the latest Index findings, visit www.tpi.net.
About TPI
TPI, a unit of Information Services Group, Inc. (ISG) (NASDAQ:III) (NASDAQ:IIIIU) (NASDAQ: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, TPI's 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. For additional information, visit www.tpi.net.
About Information Services Group, Inc.
Information Services Group, Inc. (ISG) (NASDAQ:III) (NASDAQ:IIIIU) (NASDAQ: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 www.informationsg.com.
Media Contact Details
CONTACT:
TPI
Todd Miller
+1-480-235-7018 (Market Communications)
todd.miller@tpi.net
or
Peppercom
Laura Bower
+1-212-931-6127
lbower@peppercom.com
CONTACT:
TPI
Todd Miller
+1-480-235-7018 (Market Communications)
todd.miller@tpi.net
or
Peppercom
Laura Bower
+1-212-931-6127
lbower@peppercom.com
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