News @ TPI

TPI Index Reveals Healthy Market Momentum In 2008 For Global Outsourcing Industry


  • Second-best first quarter performance ever for annualized contract value
  • Europe, the Middle East and Africa responsible for 65 percent of global contract value awarded
  • Most “new scope added” contracts ever for a quarter, an indicator of satisfaction with outsourcing relationships
  • Near record high total contract value awarded during the previous six months
  • Annual contract value for past six months up 25 percent over similar six-month period one year ago
  • Tougher economic climate for corporations offers opportunity for a defining year for the outsourcing industry

16 April 2008 – TPI, the largest sourcing data and advisory firm in the world and a unit of Information Services Group Inc. (ISG) (NASDAQ:III), a leader in the information-based services industry, announced today the findings from its quarterly analysis of the global commercial outsourcing industry for the first quarter of 2008, as well as the previous six months. According to the latest TPI Index, which tracks commercial contracts valued greater than $25 million, the first quarter was within the range of other recent quarters in terms of number of contracts awarded and total contract value (TCV). Additionally, the quarter had a tremendous year over year increase of nearly 20 percent in annualized contract value (ACV) — the value of a contract divided by its duration.

The first quarter of this year saw 122 contracts awarded valued at nearly $21 billion in TCV, and more than $4 billion in ACV. The quarter ranks as the second best first-quarter performance ever for ACV, pointing toward underlying muscle in the global outsourcing marketplace.

With several mega deals (contracts exceeding $1 billion in TCV), Europe, the Middle East and Africa (EMEA) continues to lead in outsourcing adoption, with more than 65 percent of the global contract TCV and ACV coming from this region. EMEA’s percentage of the global contract TCV and ACV is more of an indication of softness in the Americas than any absolute increase in EMEA. The Americas — while still growing in annualized revenues, are experiencing smaller contract values and shorter contract durations.

The first quarter of 2008 experienced the most “new scope added” contracts, which accounts for contract awards minus restructurings. And, for the past six months, their value topped all previous six-month measures — an important signal of general satisfaction with existing outsourcing relationships.

An analysis of the global broader market for the prior six months yielded some noteworthy landmarks. The TCV awarded during the recent six-month stretch — nearly $50 billion — was one of the highest in recent years; only one other comparable six-month period in the past five years had more TCV. ACV also saw an unusual level of activity during the six months, with more than $10 billion in ACV. By comparison, ACV for the same period one year ago was just under $8 billion. Finally, the 27 mega relationships awarded in the past two quarters represent an all-time high for any previous six-month period. Overall, the last six months got the year off to a very healthy start and lifted the historical trajectory — due to greater TCV, ACV and mega relationships — suggesting that 2008 is likely to achieve the TCV levels of the past two years.

“Since 2007 ended with the signing of a significant number of global commercial outsourcing contracts, we added a view of the prior six months to this quarter’s TPI Index to determine if there was a true trend of vitality moving into 2008,” said Peter Allen, partner and managing director, TPI. “All and all, the picture of the prior six months was very robust and indicates momentum in the broader market that we haven’t seen in years. Looking forward, we anticipate near double-digit growth by annualized revenue measures of active contracts during the remainder of 2008.”


Other major findings of the latest TPI Index include:

  • Tougher economic climate brings opportunity for the outsourcing industry to have a defining year

More than ever, companies are looking to their outsourcing service providers to deliver variability in costs and lower overall expense. In addition, just as we saw after the 2001 recession, there’s an expectation that the back-end return to growth will be made possible by the outsourcing industry.

  • EMEA on target to meet or exceed the number of contracts awarded in 2007

EMEA has maintained a steady pace for the first quarter and this holds true even if the mega deals signed in this quarter are discounted.

  • Americas region is demonstrating structural changes in some of the most vital measures of outsourcing strategies

While other countries and regions are signing more contracts of increasing average values, the United States and Americas profiles are shifting to contracts of shorter duration and value, from ITO to BPO, and to fewer mega relationships. The average TCV of contacts awarded in the Americas has dropped 50 percent, from about $206 million in 2003 to a little more than $100 million in 2008. The average duration of Americas’ contracts in the first quarter fell below five years for the first time ever.

The net effect is a market in the Americas in which offshoring is increasing in significance, services are contracted in more discrete units, and cycle-times are shorter. The service provider community is re-orienting itself for this sort of market.

  • BPO contract awards

The Americas remain the largest user of BPO by number of contracts signed, while EMEA accounted for more of the TCV awarded.

For more insights and to join the discussion on the findings, visit TPI’s blog: www.considerthesourceblog.com


About TPI

TPI, a unit of Information Services Group, Inc. (ISG) (NASDAQ:III) is the founder and innovator of the sourcing advisory industry, and the largest sourcing 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) 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.