The past year has brought a striking slowdown in new
outsourcing contracts, but October appeared to break the trend. I offer some
commentary on that month here, doing so in the context of the entire year.
Providers got over $15 billion of total contract value
(TCV) in October, the highest TCV tally for a single month in the past two
years and almost twice the TCV as the next highest month. Three mega deals
accounted for almost $8 billion of the TCV, and one -- IBM and AT&T –
accounted for $5 billion. Business-process deals figured prominently in the
month.
November doesn't
look nearly as good, but more about that month in a moment.
India-based service providers inked several mega
relationships in October, in keeping with a recent trend: While many consider
2005's ABN Amro/TCS/Infosys deal as the high-water mark for Indian providers,
since then we've seen these providers expand their client list to other large
customers. And, in some cases they have done so without employing the relatively
slower "penetrate and radiate" method that involves getting a foot in the door
then selling the client more services over time. Rather, the India-based
providers are showing their ability to win some truly big deals.
While the Indian providers may still be buying market
shares (think deals like TCS-Pearl, Genpact-Citigroup and Philips-Infosys) or
winning business with a long-time captive client (BT-Tech Mahindra), they also
are starting to compete and sometimes win on very large deals that don't
involve clients they're already working with.
The next trend to surface may find smaller India-based
service providers (EXLService, FirstSource, WNS, HCL) starting to look outside
their captive client base for a big deal.
Now the cautionary kicker: We have not seen many deals
in November, and if this month and December revert to the pattern of the rest
of 2007, October could prove to be a blip.
Look for lots more
detail when TPI hosts its next Index call in January.
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