 |
 | |
|
|
Market Data and
Trends Global Third Quarter 2008 (3Q08) TPI Index
Click
to view
Softness in Outsourcing
Contract Awards; Characteristic of Previous Third Quarters
The third quarter delivered significant softness in broader market activity — after nine successive quarters of strength in outsourcing contract awards.
- The 128 contracts awarded in the quarter amounted to the weakest total contract value (TCV) — at almost US$14 billion — and the weakest annualized contract value (ACV) — at nearly US$3 billion — in six years. (ACV indicates the value of a contract divided by its duration.)
Several factors impacted the third quarter:
- A low number of mega deals (contracts with TCV greater than US$1 billion) and a lack of mega relationships (contracts in which the ACV is US$100 million or greater)
- Europe, the Middle East and Africa's (EMEA’s) decline in TCV levels compared with recent quarters
- A dramatic drop in information technology outsourcing TCV compared with the first two quarters of 2008
3Q08 EMEA TPI Index
Click
to view
Outsourcing Activity Declines Sharply in 3Q08 for EMEA
- In EMEA, 56 contracts totaling almost €4.4 billion were signed in the third quarter of 2008 compared with 75 contracts totaling €14.8 billion during the second quarter
- The Americas outperformed EMEA in terms of total contract value awarded for the first time in nearly two years
- The average total contact value of a financial services sector outsourcing contract in EMEA fell by 37 percent to €107 million so far this year
- EMEA’s market is expected to rebound in the fourth quarter
Global Year-to-Date Trends
- Building off a strong 2008 start, year-to-date numbers and values of outsourcing contract awards are exceeding those metrics for 2007. Compared with last year at this point, the number of contracts awarded has risen almost five percent. Their TCV has grown nearly 19 percent, and their ACV has climbed 27 percent.
- We observed 15 distinct service providers who won 10 or more contracts so far in 2008. This compares with only 12 such providers for all of 2007.
- The softness in the global financial services industry’s adoption of outsourcing started late last year and continued through 3Q08. This financial services slowdown impacts — although it is not the exclusive driver of — the third quarter’s soft market activity.
Looking ahead, we see signs of strength for the fourth quarter in the
larger-transaction category. Nevertheless, the uncertainty among global
credit markets is likely to place a drag on strategic decision-making as
we enter 2009.
by Bill Frech, Partner & Managing Director, CFO Services North America, TPI
In an outsourcing risk assessment, the focus of attention is usually on the service provider’s data handling procedures. Mismanaged data jeopardizes multiple parties in an information supply chain of consumers, corporations and service providers. And when mistakes are publicized, it can rattle shareholders, too.
The stakes are high: Businesses are held accountable for mistakes; data privacy breaches are not soon forgiven or swept under the rug, especially if a third party is to blame. Reputations, and careers, can be tarnished overnight.
TPI Industry Expert Article: Seven Steps to a Successful HR Transformation
by Rosemary Collins, Partner & Managing Director, CHRO Services North America, TPI
Business transformation is a magnet for metaphors. Some compare it to morphing from a caterpillar into a butterfly. Some downplay it with phrases such as “flipping a switch.” But business transformation, even in the hands of HR-savvy leaders, is neither a natural nor a binary act. Metaphors tend to gloss over why some HR transformations succeed while others fail.
TPI News
ISG to Announce Third Quarter and Year-To-Date 2008 Financial Results
Can Outsourcers Survive the Economic Storm?
Network World
Outsourcing Deals Plunge in Europe
BusinessWeek
In a Pinch
The Economist
TPI Events
Asia Pacific Sourcing Leadership Exchange
(for sourcing executives)
The Grand Hyatt
Tokyo, Japan
November 13, 2008
For more information about the conference, contact Alison Emery.
TPI Co-Chaired Events
ProcureCon 2008
JW Marriott
Las Vegas, Nevada
November 10-12, 2008
HRO World Europe 2008
Conrad Hotel
Brussels, Belgium
November 18 - 20, 2008
For more information about the conferences, contact Madeleine Sweigart.
WARNING: Computer viruses can be transmitted via e-mail. The recipient should check this e-mail and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this e-mail.
Outsourcing Levers to
Weather a Global Recession One of the promises of outsourcing is the increased variability of costs. So, it’s no surprise that companies in all industries are questioning how to use their outsourcing contracts to react to today’s global economic crisis.
Here are the TPI Top 5 levers for users of outsourcing — and their service providers — to make an immediate impact on expenses.
- Dial back service levels
- Rationalize service provider responsibilities
- Convert from effort-based to outcome-based.
- Drive simplification.
- Consider term extension.
Consider the Source
Blog
Featured White
Paperby Brian Smith, Partner & Managing Director, FSO Services North America, TPI
Today’s crises are tomorrow’s opportunities, and today’s credit-squeeze-induced economic slump is no different when it comes to the outsourcing industry. In fact, once the dust settles in the first half of 2009, expect to see an increase in market activity as well as some major paradigm shifts.
by Indy Banerjee, Director; and Prabhash Thakur, Senior Advisor, TPI
As organizations grow in size, product lines and locations, the expertise they possess becomes increasingly dispersed. To help better use this expertise to deliver solutions or solve problems, more organizations are creating active programs to manage their enterprise knowledge.
Learn from TPI’s experts as they outline the stages of implementing a knowledge management initiative as well as how to link measurement activities appropriately to each stage of the initiative.
The information contained in this electronic message and
any attachments to this message are intended for the exclusive use of the
addressee(s) and may contain proprietary, confidential or privileged
information. If you are not the intended recipient, you should not
disseminate, distribute or copy this e-mail. Please notify the sender
immediately and destroy all copies of this message and any
attachments.
| Copyright 2008 Technology Partners International,
Inc. All Rights Reserved www.tpi.net
Forward to a colleague |
 |