ISG Research: Record Number of Outsourcing Contracts Expiring
Expirations up 27 percent last year; expected to remain high in 2013, fuel
Incumbent service providers will have to fight vigorously to keep clients
STAMFORD, Conn., July 16, 2013
STAMFORD, Conn., July 16, 2013 /PRNewswire/ --Information Services Group
(ISG) (NASDAQ: III), a leading technology insights, market intelligence and
advisory services company, today announced ISG Research showing that
outsourcing contract expirations reached an all-time high last year and are
likely to remain high in 2013.
A record 901 outsourcing contracts expired in 2012, an increase of 27 percent
from the previous year, according to the Momentum Contract KnowledgeBase® from
ISG. Expiring contracts were valued collectively at $25 billion in 2012.
A total of 886 active contracts valued collectively at $21.2 billion are set
to expire in 2013. There are eight different vertical industries with at least
$1 billion in expiring contract value and 32 individual contracts worth $250
million or more due to expire.
With so many expirations on the horizon, ISG forecasts 2013 to be another very
active year for renegotiations and could fuel them to an all-time high. Based
on historical trends, ISG expects about $15.5 billion of expiring contracts to
be up for renegotiation in 2013.
IT outsourcing (ITO) contracts account for about 75 percent of the expiring
contract value in 2013. Infrastructure Only contracts had the highest value
among expiring ITO contracts, followed by Full ITO and ADM Only. The service
line with the highest number of expirations was ADM Only, followed by
Infrastructure Only and Full ITO.
The ISG Research cited three main factors behind the surge in expiring
oThe market is seeing a higher volume of contracts with shorter time
frames, so contracts are expiring more rapidly than in the past.
oMany clients are approaching their service providers about renegotiating
their contracts midway through the contract to take advantage of cost
savings in the short term.
oClients are more willing to take scope from an incumbent provider and
award it to best-of-breed providers, further fueling the number of
contracts in the market.
"As client governance processes continue to mature and organizations become
more comfortable working with a variety of service providers, they are more
willing to consider competing their renewals if they feel they are paying too
much or if they are unhappy with their provider, said Paul Reynolds, Chief
Research Officer, Momentum. "Incumbent service providers will have to fight
vigorously to retain their clients as their competitors will be aggressively
trying to steal wallet share."
For more information about Momentum Research and the Momentum Contract
KnowledgeBase, which provides account-level data on outsourcing activity,
scope and characteristics, 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: Alex Kozlov, ISG, +1 617 558 3377, email@example.com; Jim
Baptiste, Matter Communications for ISG, +1 978 518 4527,
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