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Megadeal trends show services tactic switch by IBM

Big outsourcing deals no longer a big focus

By CBR Staff Writer

IBM appears to have changed tack in the way it chases outsourcing services contracts and for the first time in 10 years did not sign a single publicly announced megadeal last year, new research from Gartner has shown. 

The analyst group said the number of contracts worth more than $1 billion in announced contract value held steady last year, but that IBM seems to be moving away from targeting these megadeals and toward smaller, more-profitable deals.

The number of reported outsourcing megadeals awarded to a single service provider in 2008 was 12, an increase from 10 in 2007. These were valued at $17.1 billion, compared with $12 billion for 2007.

“In economic downturns, we closely watch contract reporting as an indicator of the health of the outsourcing market,” said Allie Young, VP for Gartner. “We have seen some softness in large deal signings, but no catastrophic decline.”

Deals signed between TCS and Citigroup, and Telesis and the US Food and Drug Administration stood as the biggest deals of 2008, each worth a reported $2.5 billion.

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