The Hindu Business Line : More competition, selective outsourcing — Shift in trend to impact Big Six dominance: TPI

INCREASING level of competition and a trend towards selective or single process outsourcing could pose a challenge to the dominance of the big six dominating outsourcing contracts (Accenture, IBM, ACS, CSC, EDS, and Hewlett Packard), according to TPI, a sourcing advisory firm.

With $100 billion worth of major outsourcing contracts due for renewal globally in the next two years, the big six are the incumbent service providers in 72 per cent of the contract value to be renewed.

The TPI Index Quarterly reported a shift in the trend of outsourcing contract transactions, stating that 325 deals were due for renewal in 2006-07, representing over a fifth of active contracts.

"The service providers most heavily affected are IBM and EDS, with a combined share of $50 billion in contracts coming up for renewal."

Speaking to newspersons on its year-end market observations on TPI Index, Mr Dennis McGuire, Chairman, said that quarter-on-quarter the total value for the December quarter's mega deals - transactions valued at $1 billion or more - was the highest in 2004.

Six mega deals were awarded during the previous quarter with five in December alone.

Total mega deals value for the quarter was $11.2 billion, representing 40 per cant of the full year's mega deal value.

On India's prospects in the outsourcing business, Mr Siddharth A. Pai, Partner, TPI said that though competition from international companies was growing for Indian service providers, the robust growth expected in BPO next year should minimise any impact.

However, he added, Indian service providers need to hone business excellence and develop global delivery service capabilities with multiple centre operations to become more competitive.

He also said that India figured in three transactions out of the 75 that the TPI was evaluating currently.

India's share in the BPO contracts currently stands at only four per cent, but has grown considerably in the last few years and is set to increase further.

He suggested that service providers concentrate on training to infuse better quality and concentrate on containing attrition rate.

EquaTerra-TPI to be Veritage

SOURCING advisory firms EquaTerra and TPI, who had agreed to merge to become one entity, would be known by their new name "Veritage".

Announcing the signing of the merger agreement entered into by the two companies earlier, Mr Dennis McGuire, Chairman of TPI, said the closing of formalities was expected to be completed later this month.

The new name embodied their values, objectivity and heritage for the new firm Veritage, he said.

He added it would provide clients deeper market knowledge and broader functional expertise with greater global scale and innovation that either company could provide on its own.