This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

TPI Index Shows Outsourcing Market Improved In Second Quarter

Stocks in this article: III

STAMFORD, Conn., July 12, 2012 /PRNewswire/ -- Information Services Group (ISG) (NASDAQ: III), a leading technology insights, market intelligence and advisory services company, today released TPI Index data showing that the value of the global outsourcing market improved during the second quarter despite a decline in the number of contracts awarded.

The 2Q12 Global TPI Index, which covers commercial outsourcing contracts worth $25 million or more, measured total contract value (TCV) of $21.4 billion, an increase of 7 percent from both the second quarter of 2011 and the first quarter of 2012. Driving the improvement was strong growth in both the business process outsourcing (BPO) segment and the Asia Pacific region.

The 173 contract awards during the second quarter represented a drop of 22 percent year-over-year and 14 percent sequentially. However, the market saw renewed activity in mega-deals, those contracts with a TCV of $1 billion or more, and mega-relationships, those contracts with an annual contract value (ACV) of $100 million or more.

"The outsourcing market showed improvement during the second quarter on both a year-over-year and sequential basis," said John Keppel, Partner & President, Research and Managed Services, ISG. "However, the quarter's growth was not enough to prevent a first-half decline in both value and activity from last year's record performance."

The TPI Index, presented by ISG, provides a quarterly snapshot of the sourcing industry for clients, service providers, analysts and the media. Now in its 39th consecutive quarter, it is the industry's authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider metrics.

The 2Q12 Global TPI Index tallied five mega-deals compared with just one each in the second quarter of 2011 and the first quarter of 2012. Mega-deals accounted for nearly 30 percent of global TCV during the second quarter, and three were awarded in the less mature markets of Brazil and India. Eleven mega-relationships were awarded in the quarter, compared to four a year ago and seven in the prior period.

By scope, the BPO segment awarded $8.3 billion in TCV during the second quarter, an increase of 7 percent year-over-year and 32 percent sequentially. Among the awards were two mega-deals with a combined TCV of $2.5 billion. For the first half of 2012, BPO TCV is down 13 percent.

IT outsourcing (ITO) contracts accounted for $13.1 billion in second-quarter TCV, a rise of 6 percent year-over-year but a decline of 5 percent sequentially. Year-to-date, ITO TCV is off 6 percent.

By region, Asia Pacific turned in the fastest growth during the second quarter, driven by activity the Telecom & Media and Banking, Financial Services & Insurance (BFSI) verticals and Greater China and Australia New Zealand sub-regions. The region's $4.7 billion in TCV represented year-over-year growth of 181 percent and sequential growth of 162 percent. For the first half of 2012, TCV in Asia Pacific was up 44 percent.

Americas TCV of $8.3 billion rose 6 percent over the same quarter a year ago but dropped 6 percent from the first quarter. For the first half, the region was flat. Europe, the Middle East & Africa (EMEA) registered $8.4 billion in TCV, a drop of 21 percent year-over-year and 11 percent sequentially. Year-to-date, EMEA TCV is off 24 percent, as continuing economic struggles in the Eurozone still appear to be subduing decision-making about outsourcing.

Said Keppel: "Looking forward, we anticipate a soft third quarter, which faces an especially tough comparison with 2011. The fourth quarter will likely pick up, with some help from larger deals in the pipeline ready to go to award."

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs