The Hindu Business Line : India tops in outsourcing deals

Bangalore Aug. 8 India has emerged as the largest market for new outsourcing deals in the Asia Pacific region for the first half of 2007, while the global outsourcing market saw a 25 per cent decline in the emergence of new deals, according to sourcing advisory firm TPI.

India outsourced deals worth $1.68 billion, accounting for 30 per cent of the total deals emerging from the Asia Pacific region, outpacing traditional players such as Australia and Japan, TPI said.

Big contracts

Large outsourcing contracts by telecom companies such as Idea Cellular and Reliance, amounting to $1.3 billion to the total contract value of $1.7 billion, helped India to emerge as the largest market in the first half, said Mr Siddharth Pai, Partner and Managing Director, TPI India.

Terming the rise of Indian outsourcing market to the top slot as a temporary blip, Mr Pai said other traditional outsourcers such as Australia and Japan may bounce back.

TPI index

TPI’s latest quarterly index indicates that Japan, with a share of 22.6 per cent of the total outsourcing deals in the APAC region valued at $1.24 billion, and Australia with a share of 20 per cent at $1.1 billion, followed India.

During the first half, Asia Pacific saw a 100 per cent increase in emergence of new outsourcing contracts in the $25-million plus category, valued at $5.4 billion, over the corresponding period last year. “Traditionally, the APAC outsourcing market has been seen as relatively immature in contrast to the Americas and European markets. However, a strong performance in the region in 2006 has been carried on through the first half of 2007 and we have seen straight half-years of growth in the new business demand,” Mr Pai said. “Further, the strong growth in the Asia Pacific and Europe is compensating for a very soft US market, where new outsourcing business is at its lowest since 1994,” Mr Pai said.

Mr Mark D. Mayo, Partner and Managing Director, Global Advisory Services, attributed the decline in new multi-million contracts of over $25 million mainly due to the restructuring and renewal of the existing deals happening at a sluggish pace.

The total contract value of new deals went up by 6.2 per cent and the annualised contract value grew by 5.8 per cent, whereas the emergence of new contracts declined by 16 per cent.

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