Outsourcing mkt in Asia-Pacific grows 43pc in'06

New Delhi, Jan 18: The outsourcing market in Asia-Pacific grew strongly in 2006, with the number of deals signed in the economically vibrant region valued at more than 25 million dollars, registering an increase of 43 per cent, according to TPI, the world's largest sourcing advisory firm.

At the moment, the TPI report said, success for service providers in Australia, India and Japan appeared to be the determining factor for success in Asia-Pacific.

In its first, semi-annual 'TPI Index' for the region, TPI reported that the total value of these contracts had increased by 67 per cent, representing a five-year high in outsourcing activity.

This level of activity contrasts sharply with the global trend.

Although the number of contract awards globally increased by three per cent, the value of these awards declined by eight per cent as compared to 2005.

Commenting on the phenomenon, Mr Arno Franz, Managing Partner of TPI Asia-Pacific, said, ''2006 was a stand-out year for outsourcing in Asia-Pacific. The region accounted for 13 per cent of the global outsourcing market in 2006, and the first time its market share exceeded 10 per cent since 2002.'' However, the relative immaturity of the Asia-Pacific market made it prone to spikes in activity, it remains to be seen if this is the start of an ongoing growth trend, he added.

Asia-Pacific is also showing consistent year-on-year growth in annualised revenues, the total revenues available annually to the service provider community. The Compound Annual Growth Rate (CAGR) for the region stands at 10.5 per cent, more than double the global rate of 4.5 per cent.

''Despite the 'lumpy' nature of the Asia-Pacific market in terms of yearly contract awards, the sustained growth in annualised revenues since 2002 suggests that there is strength in the Asia-Pacific outsourcing market,'' said Mr Franz.

At the same time, competition in the region has been heightened.

The Big Six of outsourcing (Accenture, ACS, CSC, EDS, HP, IBM) are winning a decreasing proportion of those deals valued at over 25 million dollars. This group won 40 per cent of Asia-Pacific total contract value, compared with a 60 per cent share in 2002.

''The increasing level of competition confirms that clients in Asia-Pacific are following the global trend and are becoming more receptive to doing business with non-Big Six Providers.

''Alongside the global giants of outsourcing, there is clearly room for smaller, specialised service providers who can address specific client needs. As the market matures, we should see this level of competition increase significantly,'' he said.

With contract volume and value reaching five-year high, annualised revenues in the region growing at double the global rate and heightened competition because of new players winning increasing market share, the outsourcing market in Asia-Pacific seems to be robust, said the report.

TPI, which operates in locations including Houston, New York, Toronto, London, Paris, Brussels, Frankfurt, Sydney, Bangalore and Singapore, offers sourcing advisory solutions that support organisational goals to create enduring value, achieve effective transformation, and meet rapidly changing market demands.

Since 2000, TPI has advised on more than 25 per cent of total contract value awarded in the broader outsourcing market, which includes commercial contract awards each valued at 50 million dollars or more.

UNI