'India in top spot in global outsourcing'

Bangalore, Aug 8: Reinforcing its prime position as the hottest destination for outsourcing, India has emerged as the largest market in the region cornering most of the global outsourcing contracts during the first half of 2007, ahead of Australia and Japan.

Talking to newspersons here today, TPI India Managing Director Siddharth Pai, releasing the latest TPI Index on outsourcing contracts, said the total value of new outsourcing contracts in the million plus bracket - where most significant outsourcing activity occurred) - was .4 billion, an increase of 100 per cent on the first half of 2006.

"This strong Asia-Pacific performance was in sharp contrast to a modest overall global increase in new business of just six per cent in the first half of 2007," he said, adding that traditionally the Asia-Pacific outsourcing market has been seen as relatively immature in contrast to the Americas and European markets and thus prone to peaks and troughs in activity.

''However a strong performance in the region in 2006 has carried on through the first half of 2007 and we have seen three straight half-years of growth in new business demand. There are signs that the Asia-Pacific outsourcing market has steadied. Indeed strong growth in Asia-Pacific and Europe is compensating for a very soft US market, where new outsourcing business is at its lowest level since 1994,'' he said.

The Asia-Pacific performance has been further impacted by an increase in global share of mega relationship volume and value.

Asia-Pacific mega relationships, those transactions with an average annual spend of 100 million USD or greater, represented 23 per cent of the global total and 23 per cent of global value, an almost doubling of share by both measures, at the expense of a sharp decline in mega relationship activity in the Americas.

Asia-Pacific was the only region to demonstrate growth in the BPO market in the first half of 2007. Eight BPO contracts, in the million or greater category, with a total contract value of 0 million were signed in Asia-Pacific in the first half of 2007, representing growth of 33 per cent by volume and 133 per cent by value compared to the first half of 2006.

Mr Pai said, "This is the third straight half-year of growth in BPO market contract value. Although still an emerging market, Asia-Pacific BPO appears to be bucking the global trend and is showing signs of sustained growth. This is not the case in Europe and the Americas where BPO markets remain tepid and lumpy. In fact, in those regions we are seeing a tendency to pursue solutions via Captives or offshore taking as alternatives to traditional outsourcing".

Other major findings of the latest TPI Index included inclusion of offshore delivery in outsourcing deals hit a record high. In the first six months of this year, 59 per cent of the deals on which TPI advised entailed at least partial delivery offshore - the highest percentage ever.

Telecom sector lead the way in Asia-Pacific Outsourcing as financial services contract value declined. Over the last five years the financial services sector has accounted for 28 per cent of global TCV for contracts valued at over $ 25mn and 38 per cent of Asia Pacific TCV. In the first half of 2007, despite a 34 per cent share of global TCV, financial services sector had just nine per cent of Asia Pacific TCV.

Telecom sector was the most prolific sector for outsourcing in the region in 2007 to date. Traditionally a strong player in Asia-Pacific, Telecom took a 46 per cent share of first half TCV in 2007, compared to a 33 per cent average in the previous five years.

However, this overall performance was strongly impacted by the China Mobile mega deal.

Other sectors showing increased outsourcing activity in the region include Manufacturing with a 26 per cent share and Energy with 12 per cent of 2007 TCV, compared to just one per cent in the previous five years. Deregulation of the energy industry in the region was providing opportunities for outsourcing as companies seek to variabilise their cost structures and become more competitive.

UNI