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January 22, 2009

Short contract outsourcing up 12%

Industry earns $90 billion in 2008

By Jason Stamper

Business uncertainty provided a steady tempo in the computing services outsourcing sector last year as companies reduced costs and preserved capital, the sourcing advisory firm of TPI has concluded after it found the 2008 market was defined by a 12% increase in smaller contract awards.

Peter Allen, managing director, TPI, said “In many ways, 2009 will be a defining year for outsourcing as the industry steps up to help clients find near-term cost-realignment opportunities.”

The company revealed today that 2008 was a strong year for the outsourcing industry with both total contract and annualised contract values exceeding overall values for 2007.

“Strong performance from the first half of the year sustained the $90 billion year-end” TPI said in a statement.

Data collated by the firm on deals bigger than $25 million in size showed that annualised contract value measured by TPI for 2008 was the largest ever with a record $17.6 billion.

A measure of total contract value divided by the duration of the contract, the change in annualised contract value reflects the impact of shorter overall contract duration and the current tactical orientation to outsourcing.

The regional contrasts in the use of IT outsourcing and business process outsourcing are also noteworthy.

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EMEA adopted the most IT outsourcing making up 62% of the total in 2008, while the Americas adopted the most business process outsourcing, at 43%.

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