On Many Fronts, a Record Quarter for the Outsourcing Industry

The results of the ISG Global Outsourcing Index report, announced on October 9th, show record-breaking performance on a number of fronts, and represent a significant turnaround from a weak first half.

Key drivers included restructurings and ITO contracts, as well as exceptionally strong performance in Europe.

Consider: a total of 353 contracts were awarded in the third quarter, the second-most ever for a single quarter. Annual Contract Value (ACV) from restructurings, as well as the number of restructuring awards, were both the highest ever for a single quarter. EMEA recorded its best third quarter ever, at $3.5 billion in ACV, up 89 percent from the previous quarter. ITO ACV of $4.4 billion in 3Q13 was the best third quarter ever, up more than 100 percent sequentially, while the 247 ITO contracts awarded were the highest of any quarter historically. While BPO activity lagged overall, a bright spot was the quarterly deal count of 106 – the second-highest third quarter ever and perhaps a harbinger of resumed growth.

Following disappointing results in Q1 and Q2, these numbers show the rebound we’ve been expecting across contract types, regions and industries. Based on a number of positive trends we’re observing, we can expect to see continued growth through Q4. That said, even with a strong finish to the year, realistically we anticipate that total numbers for 2013 will be down compared to last year.

Additional details are available here.

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.