Global IT outsourcing activity witnessed an increased momentum in the first quarter of 2010 with 444 deals – the volumes nearly six per cent higher than the previous sequential quarter.
According to research firm Everest Group, the transaction volume – which mirrors the revival in demand for IT and BPO services – were propped up by new deals in North America as well as the rebound in the financial service sector.
Seen on year-on-year basis, the volume (number of deals) was up nearly five per cent from 423 transactions recorded in the year-ago period.
Steady recovery
The annual contract value remained almost flat on a sequential basis at $3.9 billion but more significantly the higher deal volumes indicate the steady recovery in the IT market.
“North America, which is the largest geography supporting the global sourcing activity, recorded the best quarter since Q4 of 2008 as transaction volumes and the ACV increased by about 18 per cent and 36 per cent, respectively,” the Everest Group Vice-President, Mr Amneet Singh, said.
Major deals
The notable deals announced during the quarter include CSC’s IT outsourcing agreement with United Technologies; and TCS’ 10-year contract from UK’s Personal Accounts Delivery Authority for scheme administration services.
Everest pointed out that tech deals in financial service space have witnessed a recovery – 40 transactions were reported in the just concluded quarter against 26 deals in the last quarter.
The annual contract value (estimate of annual yields from all contracts) for North America geography too increased to $1.75 billion in Q1 2010 from $1.29 billion in quarter ended December 2009. The IT outsourcing contracts drove overall momentum, Everest said adding, ACV for such deals spiked to $2.80 billion from $1.95 billion in Q4 2009.
India’s share
The share of Indian suppliers in the total contract remains almost constant at 25-30 per cent of the overall deals.
Interestingly, India cornered the maximum number of new offshore-based captive units. The first quarter of 2010 saw 35 new captive announcements; of these three-fourth were in Asia and rest spread across Europe and Latin America.
“The share of India remains high in the captive landscape. Of the 35 new captives announced in Q1, as many as 11 were to do with India,” Mr Singh pointed out. In Q4, 40 new captives were announced, with India clinching 14 new centres.
But while India held on to a dominant share in offshore captive centres, the trend was less visible for new supplier delivery centres. As many as 29 of the 44 supplier delivery centres announced in Q1, came to Asia but only five of these announcements were with regard to India.
“This is because every large offshore supplier already has a significant presence in India and therefore the trend from a suppliers’ perspective is to ramp up nearshore or onshore presence,” Mr Singh pointed out.
Source:http://www.thehindubusinessline.com/2010/05/05/stories/2010050550580300.htm
