Ten-Year High in Number of Outsourcing Contracts, Total Contract Value
and Annualized Contract Value for First Half of 2008
TPI, the largest sourcing data and advisory firm in the world and a unit
of Information Services Group Inc. (ISG) (NASDAQ:III, IIIIU, IIIIW), an
industry-leading, information-based services company, announced today
strong growth for the outsourcing industry. According to the latest TPI
Index, which tracks commercial contracts valued greater than $25
million, the recently-completed second quarter produced significant
market strength and a solid trajectory for growth during the remainder
of the year.
In the second quarter, 146 contracts were awarded in the global
outsourcing industry, valued at $25.6 billion in total contract value
(TCV), and almost $5 billion in annualized contract value (ACV), or the
value of a contract divided by its duration. All three measures indicate
noteworthy market strength as this was the strongest second quarter
performance since 2000. Additionally, each of the past three quarters
has topped the $20 billion TCV mark; this series represents the best
three-consecutive quarter performance ever.
According to TPI’s analysis, the industry has
seen the highest number of outsourcing contracts, TCV and ACV during the
first half of 2008 in more than 10 years. At the midpoint of the year,
TCV in the broader market is on trajectory to eclipse the TCV record of
2004, which has been the most prolific full year to date.
Finishing as one of the strongest first halves in more than a decade is
attributed to the 282 contracts valued at nearly $49 billion in TCV, and
nearly $10 billion in ACV that were awarded in the first half of 2008,
yielding a brisk year-over-year increase of 24 percent by TCV and 36
percent in ACV. Another major factor contributing to the first-half’s
record performance is the high number of “new
scope” contract awards –
awards that factor out restructurings that reflect adjustments to
existing relationships. The new scope, which signals that the growth is
truly incremental to the market, increased in TCV and ACV at roughly 26
percent and 43 percent respectively – the
greatest year-over-year increase in the past four years.
“It appears that since the fourth quarter of
2007 and continuing today, corporate attitude towards cost-reduction has
had a new sense of urgency,” said Peter Allen,
partner and managing director, TPI. “Companies
across industry segments are expressing their concerns regarding the
uncertain business conditions by taking steps to reduce operational
costs, and the outsourcing industry is benefiting. We see little to
disrupt this outsourcing upswing as we head into the third quarter, and
we may even be looking towards a record year in 2008 for outsourcing in
terms of TCV.”
While the Americas and Asia Pacific regions did not have an appreciable
increase in market activity, Europe, the Middle East and Africa (EMEA),
by contrast, experienced 58 percent more TCV in the first half of 2008
in comparison to the same time-frame in 2007, significantly contributing
to the global TCV record. This was due to greater average contract size
in EMEA rather than a surge in the number of contracts. In fact, 10 of
the 13 mega deals – contracts in which the
TCV is $1 billion or greater – awarded in the
first half of the year were awarded in EMEA, along with 16 of the 24
mega relationships – those contracts with an
ACV of $100 million or more.
For more insight on why outsourcing is showing positive growth and
projections on how long this will last, please join the discussion on
the findings at TPI’s blog: www.considerthesourceblog.com.
About TPI
TPI, a unit of Information Services Group, Inc. (ISG) (NASDAQ:III,
IIIIU, 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, IIIIU, 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.
TPI
Todd Miller, +1-480-235-7018
Market Communications
todd.miller@tpi.net
or
Peppercom
Laura
Bower, +1-212-931-6127
lbower@peppercom.com
