Monday 20th April, 2015

According to Information Services Group’s (ISG) latest Outsourcing Index™, the global outsourcing market slowed in the first quarter of 2015 compared with last year.

The ISG Outsourcing Index™, measures commercial outsourcing contracts with annual contract value (ACV) of $5 million and above, shows first quarter ACV fell 18 percent, to $5.1 billion, well below the average in first quarters since 2006.

The total number of contract awards was 305 in the first quarter, down 7 percent from the prior year. Still, the volume of smaller deals (ACV of under $30 million) remained steady with last year’s first quarter, totaling 269 awards valued at $2.5 billion. However, larger deals, those worth more than $30 million annually, declined about 25 percent in number and value from the previous year.

EMEA, the world's largest outsourcing market shows an ACV of $2.4 billion, and its contract count at 128, both decline about 25 percent for the quarter. This was due mainly to a drop in sourcing business in the UK, a lull most likely caused by the run-up to the next election.

John Keppel, partner and president of ISG, added "Smaller deals continue to flow, and value and volume for the trailing 12 months remains in positive territory. Still, what goes up must come down, especially against the strength of last quarter and the vigorous start the industry had in the first quarter of 2014."

Information technology outsourcing (ITO) slowed in the first quarter, with $3.5 billion in ACV awarded. Conversely, business process outsourcing (BPO) saw contract volume grow 18 percent and ACV climb 13 percent, to $1.6 billion.