Today’s TPI Index, which examines fourth quarter and full year sourcing market performance, indicates that market activity did not meet the level of 2009 despite growth in the fourth quarter. Total contract value (TCV) for the market was about $22 billion, down 30 percent compared to 2009.
The Index also found clients steadily shifted toward smaller contract awards and multisourcing over the last decade – increasing from 30 to 53 percent during that period. We believe this took place as they grew disillusioned with the effectiveness of traditional single-source arrangements and realized that they could customize their sourcing solutions to leverage the skills of the best in each market.
While ITO continued to drive overall market activity, its TCV of $19 billion was down 19 percent year-over-year. Application Development & Management (ADM) contracts with Infrastructure included nearly doubled in value. Financial Services returned to its pre-recession TCV of $25 billion, with Banking, the largest subsector, turning in its best performance ever.
Restructuring activity – defined as contracts that were renewed, renegotiated or restructured –accounted for one-third of the overall market in 2010, while new-scope contracts declined 25 percent for the year.
We will share specific insights on market activity in Europe, the Middle East and Africa (EMEA) with the release of the 4Q10 EMEA TPI Index on January 24th.
About the author
John is a proven executive leader with strategic, transaction and post-transaction experience. John has helped many large, global enterprises introduce and cultivate innovation as a part of the transformation process. Many of John’s projects have led to groundbreaking transactions, particularly in the UK Life and Pensions market, where John is a sought after C-suite advisor in the strategic sourcing of insurance operations. John has also conducted significant transactions in both IT infrastructure and applications environments. As a Partner and President, he sits on the ISG Executive Board and leads ISG EMEA and Asia.
