Logo
BodyBGTop
A 'Second Wave of Firms' Moves Toward Outsourcing
More companies are considering business process outsourcing, but deal sizes are dwindling.
Posted Nov 25, 2005
Page 1



In an analysis of the top-100 outsourcing deals for 2004 just released by IDC, the research firm found a dramatic shift to more BPO, an increase in the number of players, and a reduction in total deal value. These developments reflect increased competition and expansion in the marketplace, and create pressure for traditional outsourcers to alter their business models to compete in the coming years. The value of the top 100 outsourcing deals in 2004 decreased by 1.2 percent from $69.1 billion in 2003 to $68.3 billion in 2004, according to the report. The study also found that the share of BPO and processing services deals in the top-100 outsourcing deals increased from 15.2 percent in 2003 to 25 percent in 2004, while the share of IT outsourcing services suffered a decline to 75 percent of the 2004 market. "We're starting to see a second wave of firms moving to outsourcing," says Paul Horowitz, partner, outsource advisory leader for PricewaterhouseCoopers, New York. "We expect to see the number of jobs overseas double in the next 10 years. Recently there has been "a lot more interest" in Latin America, Malaysia, and Singapore, Horowitz says, citing payroll, human resources, and KM jobs moving offshore. "BPO is moving from hot to sizzling." The primary question from firms now isn't what to outsource, but what not to offshore, according to Horowitz. The study found that the number of players participating in the top-100 deals increased from 26 in 2003 to 34 in 2004. While just three players captured 55.6 percent of the contract value for these deals in 2003, seven were needed to reach roughly the same amount (55.9 percent) in 2004, with IBM leading the way, followed by CSC, EDS, Atos Origin, HP, Accenture, and Fujitsu. Geographically the value of deals captured by Asia-Pacific based contracts, though still small, showed a jump from 0.7 percent of total deal value in 2003 to 3.9 percent in 2004. European-based players, as determined by headquarters, increased their take of these deals from 21.7 percent in 2003 to 38.9 percent in 2004, while America's vendors saw a decrease from 76.7 percent to 56.3 percent during this same period.
There is increasing pressure at shareholder meetings to outsource more positions overseas, Horowitz says. "More firms are moving more stuff overseas. I think we're just seeing the tip of the iceberg. While everyone is [outsourcing] or thinking about it, I'm surprised by how many firms that haven't done it that are name-brand firms." Related articles: Making Outsourced CRM Work The BPO Market Will Sustain Double-Digit Growth Losing the Offshoring War
Page 1
To contact the editors, please email editor@destinationCRM.com
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
Learn more about the companies mentioned in this article in the destinationCRM Buyer's Guide:
{0}
Search
Popular Articles
 

BodyBGRight
Home | Get CRM Magazine | CRM eWeekly | CRM Topic Centers | CRM Industry Solutions | CRM News | Viewpoints | Web Events | Events Calendar
DestinationCRM.com RSS Feeds RSS Feeds | About destinationCRM | Advertise | Getting Covered | Report Problems | Contact Us