News @ TPI
TPI Index Cites Strongest-Ever First Quarter in Outsourcing Contracts
HOUSTON, April 12, 2006 — TPI, Inc., the world’s leading sourcing advisory firm, today announced its latest market observations in the TPI Index, a quarterly report on the state of the global outsourcing industry. The first quarter’s strong performance of $22.7 billion in total contract value (TCV) for contracts valued at $50 million or more was up 173 percent year-over-year, comprising a record number of 83 outsourcing transactions. This quarter’s performance was buoyed by the best January ever in the history of outsourcing.
“Restructurings of first-generation agreements have yielded an increased impact on both the volume and the value of contracts in the broader market this quarter, with restructurings representing 33 percent of the TCV signed,” said Peter Allen, Partner & Managing Director, Market Development, TPI, Inc. “This compares to 24 percent of TCV during all of 2005, which was a record year for restructurings.”
Restructurings include renegotiations, extensions and renewals to existing agreements. The 19 contracts restructured this quarter were worth $7.5 billion. Contract restructurings tended to increase the average TCV for outsourcing contracts this quarter.
Business Process Outsourcing (BPO) also experienced a distinct increase this quarter. The number of BPO transactions was up 63 percent year-on-year, totaling 49, which marks an all-time high for BPO contracts signed in a single quarter. In terms of TCV, this quarter was also strong with $7.3 billion in total BPO value, significantly higher than this time a year ago.
“In 2005, BPO TCV was relatively soft, but both this quarter and last quarter have shown a marked rebound, giving us the best consecutive two-quarter performance since early 2004,” said Peter Allen.
American firms signed approximately two-thirds of all BPO contracts in the marketplace this quarter, led predominantly by the Financial Services industry. Financial Services accounts for more than 30 percent of total BPO contracts, and 46 percent of the total value signed.
TPI’s pipeline has expanded to a record high number of 79 transactions, valued at more than $22 billion in anticipated awards, an indicator of strong potential market activity in the coming months.
To view past and current TPI Index presentations, and to order the Q3 2006 TPI Index Insider, please visit http://www.tpi.net/knowledgecenter/tpiindex/.
About TPI
TPI is the sourcing advisory industry founder, and the largest advisory firm in the world focused on a broad range of business support functions and related research methodologies. Applying deep functional domain expertise of accomplished industry experts who possess extensive practical experience, TPI collaboratively works with organizations to help them optimize their business operations through the best combination of insourcing, offshoring, shared services and outsourcing.