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LONDON, July 29, 2010 ― TPI, the largest sourcing data and advisory firm in the world and a unit of Information Services Group, Inc. (ISG) (NASDAQ:III), an industry-leading information-based services company, today released data showing that the commercial outsourcing market in Europe, the Middle East and Africa (EMEA) has yet to exhibit signs of recovery following the sharp downturn in demand in mid-2008, with lacklustre outsourcing activity in the United Kingdom and Germany in the first half of 2010 causing an overall decline from the same period last year.
The 2Q EMEA TPI Index, which measures commercial outsourcing contracts valued at €20 million or more, showed that total contract value (TCV) of €13.3B was awarded in the region in the first six months of the year, down 6 percent from the first half of 2009. TCV fell by more than 50 percent in both the U.K. and Germany.
The impact of the decline in these traditionally strong markets was offset somewhat by a number of large contract signings in the Nordic region and France. In the first half of 2010, the Nordics accounted for almost 17 percent of global TCV, making it the second-largest outsourcing market in the world behind the United States.
Globally, the TPI Index measured TCV of almost €32 billion during the first half of 2010, essentially flat with the same period in 2009. The Americas showed particular strength, with TCV up nearly 30 percent, spurred mainly by growth in the U.S. Asia Pacific suffered a drop of almost 60 percent during the same period.
Said Duncan Aitchison, Partner and President of TPI, EMEA: “The market appears to be following a first-in, first-out pattern, with the U.S. now showing some signs of sustained recovery while Europe has yet to see an upturn. Historically, the U.K. has lagged the U.S. by 18 to 24 months. We will watch with interest to see if signs of improvement in EMEA occur more quickly,”
By scope, ITO TCV in EMEA during the first half of 2010 totalled €11 billion, down only very slightly on the year before. Total contract value for business process outsourcing (BPO) in the first half of 2010 declined by 14 percent to €2.4 billion.
By industry sector, in the first half of 2010, the Travel, Transportation & Hospitality sector and the Business Services vertical each increased their share of EMEA TCV as the result of a few large contract awards. Total contract value in the Financial Services sector was flat compared to the first half of 2009 while the Manufacturing sector recorded a year-on-year decline in TCV.
For the first time, the EMEA TPI Index reported on Public Sector outsourcing trends in the region. Public Sector contracts awarded in EMEA in the first half of 2010 stood at over €9 billion, with the UK Public Sector accounting for 86 percent of EMEA Public Sector spend.
Between 2005 and 2009, the Public Sector accounted for 57 percent of outsourcing TCV in the U.K. compared to the Commercial Sector’s 43 percent share. In the first half of 2010, there was a notable shift as the Commercial Sector share fell to just 25 percent of the UK market. With a 75 percent share of U.K. outsourcing spending and an increased appetite to explore outsourcing options, the Public Sector has become an increasingly important target for service providers to help balance the reduced opportunities in the Commercial Sector.
Said Aitchison: “Looking forward, the increased momentum in the U.S. market is encouraging. But whether that momentum will be sustained and spread to EMEA is still too early to call. Our outlook for the remainder of the year remains cautious.”
TPI, a unit of Information Services Group, Inc. (ISG) (NASDAQ:III), is the founder and innovator of the sourcing advisory industry, and the largest sourcing data and advisory firm in the world. We are expert at a broad range of business support functions and related research methodologies. Utilizing deep functional domain expertise and extensive practical experience, our accomplished industry experts collaborate with organizations to help them advance their business operations through the best combination of business process improvement, shared services, outsourcing and offshoring. In 2010, TPI was ranked no. 1 by the International Association of Outsourcing Professionals Global Outsourcing 100: World’s Best Outsourcing Advisors. For additional information, visit www.tpi.net.
About Information Services Group, Inc.
Information Services Group, Inc. (ISG) (NASDAQ:III) was founded in 2006 to build an industry-leading, high-growth, information-based services company by acquiring and growing businesses in advisory services, including strategy, implementation and management, and market information, including market measurement, analytics and related product and services. In November 2007, the company acquired TPI, the largest sourcing data and advisory firm in the world. Based in Stamford, Conn., ISG has a proven leadership team with global experience in information-based services and a track record of creating significant value for shareowners, clients and employees. For more, visit www.informationsg.com.