BPO is expected to grow by roughly 10 percent year-on-year due to the large number of contracts valued at less than $25 million. Although the TCV was lower, BPO had a great deal of activity in the third quarter with 58 signed contracts — an increase of more than 23 percent quarter-on-quarter and more than 26 percent year-on-year. The value of the third-quarter contracts exceeded $4.5 billion, which is up about 9 percent quarter-on-quarter, but down 15 percent year-on-year due to the number of single-process deals.

“The BPO market did experience growth globally in the third-quarter. We saw Europe closing the gap with the Americas, with nearly a 46 percent share of the BPO TCV signed so far this year, compared with almost 49 percent for the Americas,” said Siddharth Pai. “Meanwhile, Big Six providers have seen their share of the BPO market drop from 40 percent to 35 percent.”

On the global service provider landscape, Indian-based providers continued to gain TCV market share, increasing from nearly 1 percent in 2004, to slightly over 4 percent of the Broader Market bookings so far in 2006. Their share of awarded contracts has also increased from about 2 percent to nearly 8 percent during the same period. India-based providers are beginning to sign business in infrastructure-related areas, and they have over 25 percent TCV share in the pure applications development and maintenance (ADM) market, more than any single multinational service provider.

TPI’s report introduced a view of annualized contract values awarded, which negates the impact of the shorter contract durations by presenting a view of the average contract value available in a typical year during the contract term. By this measure, 2006 is on a pace to produce absolute growth in outsourced contracting. “The traditional perspective of total contract value doesn’t fully convey the underlying trends in terms of the annual flow of contracting. This new metric will provide the market with a much more insightful measure of the trends,” said Siddharth Pai.

With shorter contract durations, it is unlikely that fourth quarter total contract value (TCV) results will push total annual contract value beyond its 2005 mark of nearly $82 billon. Yet, the annualized metric shows a pace to achieve unprecedented heights in terms of annual flow of contracts.

 

Sourced From:  Torque Communications Private Ltd