Press Release

Asia Pacific Outsourcing Market Surges on New Scope Awards

1H12 Asia Pacific TPI Index: Total contract value jumped 44 percent year-over-year

India-heritage service providers significantly outperform U.S., European counterparts

SYDNEY, July 30, 2012 ― Information Services Group (ISG) (NASDAQ: III), a leading technology insights, market intelligence and advisory services company, today released data showing that the outsourcing market in Asia Pacific surged during the first half of 2012, producing its strongest first-half performance in almost a decade.

The 1H12 Asia Pacific TPI Index, which measures contracts valued at $25 million or more, found total contract value (TCV) of $6.5 billion, a jump of 44 percent from in the first half of 2011 and the highest first-half total since 2004. The region awarded 59 contracts during this period, down 11 percent from the unusually robust year-ago period but comfortably ahead of the five-year average for first halves in Asia Pacific.

By contrast, in the other major regions of the world, fiscal and financial challenges continued to slow corporate decision-making. The outsourcing market in Europe, the Middle East and Africa saw first-half TCV drop 24 percent, while in the Americas, it was down 13 percent.

“The first half of 2012 once again demonstrated the great potential for outsourcing in Asia Pacific and its importance to the global market,” said Arno Franz, Partner & President, ISG Asia Pacific. “Organizations in this region are quickly learning that outsourcing operations enables them to enjoy the benefits of variable costs at a time of wider economic uncertainty.”

The TPI Index, presented by ISG, provides a quarterly snapshot of the sourcing industry for clients, service providers, analysts and the media. It is the industry’s authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider metrics.

New scope awards dominated the Asia Pacific market during the first half of 2012, rising 65 percent and accounting for 94 percent of overall TCV. Much of this new scope TCV was awarded to India-heritage providers. This marked the third consecutive year of significant first-half new scope TCV growth in the region, which now stands just $200 million shy of matching its full-year total for 2011. By contrast, Asia Pacific restructuring TCV fell 46 percent to below its five-year average.

By country, all of the markets in the region except South Korea and Australia/New Zealand saw their TCV rise over the first half of 2011. The growth was led by India, which awarded the region’s only mega-deal, defined as a contract with TCV of $1 billion or more. However, even excluding that award, India TCV posted significant year-over-year growth.   

By industry, Telecom & Media, Financial Services and Business Services turned in the strongest growth, with Telecom & Media and Financial Services accounting for 65 percent of overall Asia Pacific TCV. Among major verticals, only Energy saw its TCV decline year-over-year.

By scope, the TCV of business process outsourcing (BPO) rose 113 percent to $3.2 billion, driven by an increase in large contract activity. This marked the fourth straight year of first-half growth for Asia Pacific BPO, which now accounts for nearly 50 percent of the region’s overall market. The TCV of IT outsourcing (ITO) rose 10 percent year-on-year to $3.3 billion, the third consecutive year of first-half ITO growth.

Among service providers, India-heritage companies significantly outperformed U.S. and European competitors during the first half of 2012. Together they accounted for 42 percent of ITO TCV and 77 percent of BPO TCV in the region.

“The success of India-heritage providers in winning new scope outsourcing awards in this region is a sign of their increasing importance in global market share comparisons,” Franz said.
“Looking ahead, we expect them to continue to perform well, as Asia Pacific is on track to record its best year yet for BPO and need only maintain its five-year averages to end in a banner year for TCV.”

For more information on the 1H12 Asia Pacific TPI Index, please visit http://www.isg-one.com/web/research-insights/tpi-index/.

About Information Services Group
Information Services Group (ISG) (NASDAQ: III) is a leading technology insights, market intelligence and advisory services company, serving more than 500 clients around the world to help them achieve operational excellence. ISG supports private and public sector organizations to transform and optimize their operational environments through research, benchmarking, consulting and managed services, with a focus on information technology, business process transformation, program management services and enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, the deepest data source in the industry, and more than five decades of experience of global leadership in information and advisory services. Based in Stamford, Conn., the company has more than 700 employees and operates in 21 countries. For additional information, visit www.isg-one.com.