Specialist Outsourcing Gaining Acceptance – Study

According to Datamonitor and Everest, the mid-level IT outsourcing service providers have bagged some prime services contracts for the period ending 3Q 2005, showing a marked increase in demand for utilizing specialist IT outsourcing providers to manage specific functions.

The quarter saw second-tier international vendors including US-headquartered Keane, and Pomeroy, along with Indian IT service providers like Tata Consultancy Services (TCS) and Infosys, signing their most voluminous contracts ever.

Datamonitor, for the study, tracked a total of 432 outsourcing deals, which was a percent less than the year-ago period. The value of deals also fell by 32 percent from USD 41.9 billion in 3Q 2004 to USD 28.5 billion in 3Q 2005, with the average contract size declining from USD 95.7 million in Q3 2004 to USD 66 million 3Q 2005. The main reason cited for the drop was that only about half the number of billion dollar deals tracked in 3Q 2004 were tracked in 3Q 2005.

Finance and Accounting Outsourcing (FAO) has been cited as the major upcoming segment. With deals such as the one signed between Accenture and National Australia Bank for servicing of the bank’s accounts payable functions from a center in Bangalore, India.

As per the Everest group, although the current FAO market is tapped only by major providers like Accenture and IBM, which hold 32 percent and 29 percent respectively, new entrants, such as Genpact (earlier known as GEICS) and WNS, another Indian BPO provider, are displaying impressive growth and posing tough competition to the market leaders.


reported by GlobalOutsourcingNow