| GS100: The Global Outsourcing Compendium | |||||||||||||||||||||||||
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When the economy buckled down into a recession in 2008, the global outsourcing industry still seemed very robust. Slowly, but surely, the impact of the recession was felt by the industry during 2009. Companies clammed up on ambitious technology projects that required huge outlays in investment and CIOs were forced to operate on constrained IT budgets which largely focused on squeezing more bang from the bucks that were spent in the earlier years. Spending was guided by discretion into areas that were necessary to ‘keep the lights on’ and saving costs became the driving factor in decisions.
Outsourcing’s potential to save costs actually helped. Service providers (vendors) were forced to operate in a new environment in which they got paid for business outcomes rather than effort. On the BPO side, a few of the processes related to industries directly affected by the recession or industries directly responsible for recession (like mortgage processing, title management, etc.) almost vanished. In other areas, where BPO partnerships were already under way, the service providers were tasked with delivering business outcomes at lower cost. There were very bright spots if at all in both IT services and BPO.
The market reached a bottom in the first half of 2009 and then started recovering in the second half of 2009. In fact, the industry put up an impressive performance in the last quarter (Q409) with market’s total contract value (TCV) reaching $24.7 billion, an increase of 47 percent sequentially and 8 percent year-over-year and the best quarterly performance since the second quarter of 2008, according to figures from TPI. However, TPI’s report stated: “Full-year 2009 results could not overcome the market’s weak showing during first two quarters. TCV for the year declined 13 percent to $74.5 billion, its lowest point since 2001.”
