Outsourcing to grow 8.1% in 2008

The global outsourcing market continues to grow at a steady pace, with a forecast growth rate of 8.1% in 2008. Publicly reported IT outsourcing (ITO) and business process outsourcing (BPO) contract values decreased overall by 50% in 2007, Gartner reports. Indian providers are growing approximately 40% annually in the US and 60% annually in Europe.

New Asia-Pacific outsourcing contracts command $25 mln

The total value of new (as opposed to renewed or restructured) outsourcing contracts to Asia-Pacific in the $25 mln plus bracket – where most significant outsourcing activity occurs – is $5.4B, an increase of 100% on the first half of 2006. Eight BPO contracts, in the $25 mln or greater category, with a total contract value of $700 mln were signed in Asia-Pacific in the first half of 2007, representing growth of 33% by volume and 133% by value compared to the first half of 2006, TPI says.

HR services up 8% in 2006

In 2006, HR services spending started to level off and grew 8% worldwide over 2005, according to IDC. The worldwide market for HR services in 2006 showed an increase of 8% over 2005. In the United States, HR services grew 8.7%.

Small business who outsource IT end up spending less than 5% on maintenance and upgrades

The majority of SMBs that outsource (54%) spend less than 5% of annual revenues on maintaining and upgrading IT infrastructure, while 64% of non-hosting companies spend more than 10% of revenues on IT. Companies that outsource (68%) are much more aggressive about using IT assets to engage in e-commerce than companies that manage technology infrastructures internally (29%). By more than 85%, outsourcers report that their IT organizations play an important role in remaining competitive in their respective industries than those that do not outsource, ThePlanet reports.

HR outsourcing to grow to $18.9 bln by 2010

Human resources (HR) business process outsourcing (BPO) is the fastest-growing segment of HR services and will grow at a compound annual growth rate (CAGR) of 16% in the United States, reaching $18.9 bln in spending by 2010. In 2004, 37% of US HR outsourcing spending was on HR BPO services. IDC projects that HR BPO services will continue to grow, reaching 46% of HR outsourcing spending in 2010 as the market solidifies and leaders achieve profitability through economies of scale.

Asia-Pacific IT outsouring market reached $10.9 bln in the first half of 2006

According to IDC, the total ICT Outsourcing and Managed Services market in the Asia-Pacific region topped $10.9 bln in first half of 2006. IDC expects the total market for 2006 to reach $23 bln, or an annual growth rate of 12% over 2005. However, Value Added Managed Services (VAMS) is expected to outpace the entire market with a growth rate of close to 20%. This compares favorably with growth rates of 5-6% for enterprise wide outsourcing and 9-11% for managed connectivity.

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Brazilian printing outsourcing up 42.5% in 2005

Brazilian printing outsourcing market achieved record YTY growth of 42.5% in 2005. Nearly 8 bln pages were printed by the use of such service as a whole in 2005. 41% of the 500 largest enterprises in Brazil have outsourced printing. Another 20% of the remaining companies intend to do so up to the end of 2006, when large contracts in the finance and industry sectors are expected to stand out, IDC says.

What law companies outsource

Almost two-thirds of US law companies said their firms had outsourced some functions within the past year and more than half reported that their firms had begun outsourcing some functions five or more years ago. The most frequently outsourced functions were related to documents?mailroom, messenger, and reprographics. The second-most frequently outsourced functions were administrative: travel and food services.

Less than 20% of firms surveyed outsource IT functions, but many were open to doing so in the future. Very few firms outsource accounting functions or plan to do so in the future. More than 90% of respondents reported that the companies they employed for outsourcing are located in the continental US More than 60% of those who outsourced functions said they did so primarily because outsourcing allowed them to focus on core competencies. More than one-third also cited cost savings, ALM Research says.

IT offshore spending to reach $29.4 bln by 2010

According to IDC, the global and US markets for offshore IT services continue to grow at a remarkable rate, driven primarily by US customer demand. IDC predicts that offshore IT services vendors will capture $29.4 bln in worldwide customer spending by 2010, with little sign of a market slowdown.

Top 100 Western European outsourcing deals generated $40.5 bln in 2005

The total value of the top 100 Western European outsourcing deals reached $40.5 bln in 2005, according to IDC. This compares with $42.1 bln in 2004. In 2005, however, the largest deals got bigger, with nine megadeals signed for a total of $20.5 bln. IS outsourcing and network and desktop outsourcing (NDOS) account for the lion’s share of the aggregate value of the top 100 deals, at a combined $32.7 bln. BPO adoption continues to provide encouraging signs, but adoption has not met expectations. Growth rates in BPO across Western Europe still make this one of the most attractive markets in pure growth terms, but outside of the UK the net value of the market is very small. IBM has lost pole position in the Western European top 100 outsourcing deals regarding aggregate value of deals. While IBM signed 14 deals in 2005, more than any other vendor, the aggregate value was not enough to offset larger-scale wins by BT Global Services and EDS.

Outsourcing spending by Asia-Pacific companies to reach $16 bln in 2010

IDC predicts that the amount spent on outsourcing by companies in Asia-Pacific (excluding Japan) will exceed $10 bln in 2006. India and the PRC will continue to be the high-growth markets in the next five years. With CAGR of 19% and 31% respectively over 2005-2010, these markets are not expected to have fully matured by 2010. This strong buildup is primarily driven by the large infrastructure growth over the past several years. The management of this infrastructure is now evolving to become a natural add-on, especially in the PRC where users have historically been lagging in outsourcing. IDC forecast that the market will grow from $9.58 bln in 2005, to $16.06 bln in 2010. This represents a compound annual growth rate (CAGR) of 10.9% over the forecast period.

Facts and figures, market shares, statistics about information technology on ITFacts.biz

Global procurement BPO market generated $627 mln in 2005

IDC estimates that the worldwide procurement BPO market reached $627 mln in 2005, and will expand at a five year compound annual growth rate (CAGR) of 22.3% to reach $1.7 bln by 2010. The study reveals that growth in customer spending is accompanied by a more crowded and diverse competitive landscape, with more aggressive activity coming from newer entrants such as services procurement BPO providers and Indian offshore BPO providers.

Indian software and backoffice industry generated $23.6 bln in fiscal 2005-2006

India’s software and backoffice services industry recorded 33% growth in export revenue to $23.6 bln in the year to March 2006. This included $6.3 bln from services like call centres, payroll processing, claims management and high-end financial analytics. Including the domestic market, the sector expanded 31% on year to $29.6 bln. Overall software and services revenue is projected to grow 25-28% to $36-$38 bln in the year to March 2007. Exports are likely to grow 27-30% to between $29-$31 bln. The United States is the biggest market for Indian software firms, accounting for as much as 70% of revenue.

European service providers plan to increase offshore assets by 65%

According to a new IDC study, European service providers are quickly building up offshore capabilities. Large and medium-sized European service providers have already established themselves in a number of offshore locations such as India, Eastern Europe, and South America to compete with offshore-based and global service providers such as Tata Consultancy Services, Wipro, IBM, and Accenture, and plan to increase their offshore assets by 65% during 2006.

Payments outsourcing generated $3.3 bln by 2005

IDC estimates that US spending on payments BPO services reached $3.3 bln in 2005 and will grow at a 5-year CAGR of 4.2% to reach $4 bln by 2010. This increasing trend of payments outsourcing presents new opportunities and challenges for financial institutions and payments processing vendors.