ISG Outsourcing Index: Global Market Sagged in First Quarter
Annual contract value totaled $3.9 billion, down 27 percent over year ago
Strength in mega-relationships, BPO, Asia Pacific despite weak overall results
STAMFORD, Conn., April 11, 2013
STAMFORD, Conn., April 11, 2013 /PRNewswire/ --Information Services Group
(ISG) (NASDAQ: III), a leading technology insights, market intelligence and
advisory services company, today released data showing the global outsourcing
market sagged in the first quarter.
The 1Q13 Global ISG Outsourcing Index, which measures commercial outsourcing
contracts with an annual contract value (ACV) of $5 million or more, totaled
$3.9 billion, a decline of 27 percent over the first quarter of 2012 and 24
percent over the fourth quarter of 2012.
The weak results masked several bright spots in the market, including a surge
in the ACV of the largest contracts, ongoing strength in the business process
outsourcing (BPO) segment and a healthy increase in performance in Asia
"On the surface, the numbers are less than encouraging, but a different
picture emerges when we dig a little deeper and put this quarter into the
broader context," said John Keppel, President, ISG Research, and Chief
Marketing Officer. "In particular, deal timing seems to have affected the
first quarter. But based on our industry pipeline analysis, we expect a more
bullish performance in the second half of 2013."
Now in its 42^nd consecutive quarter, the ISG Outsourcing Index (formerly the
TPI Index) provides a quarterly review of the latest sourcing industry data
and trends for clients, service providers, analysts and the media. For more
than a decade, it has been the authoritative source for marketplace
intelligence related to outsourcing transaction structures and terms, industry
adoption, geographic prevalence and service provider performance.
The 1Q13 Global ISG Outsourcing Index tallied 223 contracts awarded in the
first quarter, a drop of 24 percent from a year ago and 16 percent from the
prior quarter. However, the decline was most evident among smaller awards.
Mega-relationships – those contracts with an ACV of at least $100 million –
rose 54 percent year-over-year and 4 percent sequentially.
By scope, the BPO segment of the market maintained the strength it has
displayed since early 2011, with the number of contracts awarded in the first
quarter down just 3 percent over a year ago and up 16 percent from the prior
quarter. ACV totaled $1.5 billion during the quarter, a decline of 10 percent
year-over-year and 18 percent sequentially. Among industries, the
Telecommunications and Travel & Transportation sectors significantly
outperformed their historical averages for BPO.
Results for the IT outsourcing (ITO) segment of the market dropped sharply.
The 127 contracts represented a decline of 34 percent over a year ago and 30
percent over the prior quarter. ACV of $2.4 billion was down 35 percent
year-over-year and 28 percent sequentially. Virtually every industry saw ITO
fall with the exception of Energy, driven by large deal activity in that
By region, Asia Pacific outperformed the rest of the world in the first
quarter. Led by positive results in Australia New Zealand, the region tallied
ACV of $440 million, up 8 percent over a year ago but down 23 percent over the
prior quarter. The region's trailing 12-month performance is up 80 percent
over the prior 12-month period, helped by impressive growth in China and
The mature markets in Europe, the Middle East & Africa (EMEA) and the Americas
drove down results in those regions during the first quarter. With weakness in
the United Kingdom and Germany, EMEA registered ACV of $1.9 billion, down 20
percent year-over-year and 30 percent quarter-over-quarter. However,
restructuring ACV in the region was up 12 percent over a year ago and 29
percent over the prior quarter.
In the Americas, ACV of $1.6 billion was down 39 percent year-over-year and 15
percent sequentially, with the United States contributing the most to the
decline. However, Americas BPO was up 17 percent over a year ago and 51
percent over the prior quarter, outperforming the ITO segment in that region
for the first time.
"Looking ahead, we are keeping our expectations in check for the second
quarter, as clearly there remains some softness in the overall market," Keppel
said. "That said, as we look out to the remainder of the year, we are seeing
positive signs in the marketplace. The continued strength in BPO, now two
years in the making; the continued positivity in the emerging markets over the
last 12 months; and the impact of timing on deal flow so far this year, which
we know from experience will eventually rebound, all point to a healthier
outlook for the full year."
The 1Q13 Global ISG Outsourcing Index was presented during a conference call
and webcast for media and analysts today. To listen to an audio replay of the
call and view presentation slides, please visit
About Information Services Group
Information Services Group (ISG) (NASDAQ: III) is a leading technology
insights, market intelligence and advisory services company, serving more than
500 clients around the world to help them achieve operational excellence. ISG
supports private and public sector organizations to transform and optimize
their operational environments through research, benchmarking, consulting and
managed services, with a focus on information technology, business process
transformation, program management services and enterprise resource planning.
Clients look to ISG for unique insights and innovative solutions for
leveraging technology, the deepest data source in the industry, and more than
five decades of experience of global leadership in information and advisory
services. Based in Stamford, Conn., the company has more than 800 employees
and operates in 21 countries.
For additional information, visit www.isg-one.com.
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SOURCE Information Services Group (ISG)
Contact: Andrew Park, ISG, +1 919 259 9252, email@example.com; or
Gwennie Poor, Cohn & Wolfe for ISG, +1 212 798 9842,
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