Since the peak of the financial crisis, when companies put many projects on hold, they have apparently found smaller to be better. The past year was the busiest for outsourcing service providers, with 870 contracts awarded in 2011. Just over 75% of those contracts were between $25 million and $99 million, according to Information Services Group (ISG).
The outsourcing data and analysis firm included only deals worth at least $25 million in its latest tally, released on Wednesday. But its analysts have found that projects on an even smaller scale are getting more prevalent as well. “Small contracts worth less than $1 million have really taken off,” says John Keppel, president of research and managed services and chief marketing officer of ISG.
The trend toward smaller contracts will likely continue, particularly in the United States, where businesses have long been accustomed to using outside service providers. ISG believes the shift is a sign of a mature market, while other regions newer to outsourcing are still making larger deals. The smaller contracts have been high enough in volume to also keep the total worth of contracts relatively high. In 2011, total contract value (which covers the life of the contracts) of the overall outsourcing market was $95 billion, a 3% increase over 2010. ISG gave the industry an optimistic future, believing outsourcing activity will increase by 5% to 7% this year.
Read More:
http://www3.cfo.com/article/2012/1/supply-chain_outsourcing-smaller-contracts-bpo
Tags: company, development, IT, outsourcing, software