Continued...

  GS100: 2011 Global Services Compendium
  View
  Download
The split between contract restructuring and new scope reveals that the year was predominated by restructuring, which showed a 39% increase over 2009. At the same time, new scope contracts showed a sharp decline of 25 percent. It means that in 2010, the focus of outsourcing was to extend existing relationships, mostly on renegotiated rates and different terms. New scope is suggestive of fresh activity, which in itself, is an indication of growth and advancement of the envelope of outsourcing. In other words, depressed new scope denotes sluggishness.

BPO contracts in 2010 fell by 31 percent. In addition, most of the BPO activity was from the Americas. One of the prominent reasons for this is that BPO contracts are often smaller in value. The days of large multi-tower BPO deals are over. Instead, companies are now looking at part processes and having a phased approach to implementing end-to-end business processes. Multi-sourcing is another reason for BPO numbers to drop. (see Figure 2)

Fig. 2

In 2010, nearly three-fourths of the contracts were multi-sourced, which in comparison to 2000, suggests that true multi-sourcing has become the mainstream practice.

In summary, 2010 was a difficult year brought about by the effects of recession and manifested as reduced TCV, increase in restructurings, and reduced new scope.

Add to this, a general decline in contract sizes and a deepening of the trend of multi-sourcing. These are the new behaviors that are likely to continue. In summary, none of this suggests that outsourcing is coming to a logical decline in activity. The economic case for outsourcing is still strong, the strategic case for outsourcing is proven, and there’s a whole lot of scope for more outsourcing in all areas. That’s the reason that in 2011, we would see a steady recovery and a more positive outlook.

  GS100: 2011 Global Services Compendium
  View
  Download


Email | Print | Comment | Bookmark and Share