The value of outsourcing is expected to drop by 10 to 15 per cent this year despite record gains in the number of contracts signed in the same period, according to a new report.The total value of 2005 deals will fall to between $60 billion and $65 billion from an average of $72 billion over the recent years, according to Technology Partners International, a sourcing advisory firm.
Red Herring, a technology publication, also reported that the number of contracts signed had risen by about 11 per cent to 191 so far in 2005 from 172 at this time last year.
The emergence of offshore providers, particularly in India, is spurring competition among established global players such as IBM Global Services, Electronic Data Systems, Accenture, and a slew of vendors that compete in the services area, Red Herring reported.
Peter Allen, TPI's managing director of global practices, blames the decline on the sluggishness of the business process outsourcing market, as well as growing competition from countries such as India, where labour is cheaper than in the US or Europe.
"Firms are increasingly taking advantage of offshore service delivery, reducing the TCV (total contract value) of contracts.
TCV is also sluggish because of reduced capital intensity and shorter terms in ITO (information technology outsourcing) contracts," said Allen.
© Copyright 2008 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.
|
Advertisement
Email this Article 
Print this Article