Bulls vs. Bears

Our most recent TPI Index quarterly report caught the attention of some outsourcing heavyweights, including executives at certain service providers who are not happy with our outlook for 2007. One even told me, "Your last report is really hurting the outsourcing industry".

What we reported was largely retrospective, and no one has offered any facts to disprove our tally. To recap: We said that the first quarter saw a dramatic decline in the number and value of larger commercial outsourcing signings, compared sequentially and year-over-year. We offered the view that 2007 was stacking up to be a relatively soft year for new contract awards, continuing the trend begun in 2006. 

Our forward projection is based on our own pipeline of transactions underway, and what we know to be happening in the marketplace. We don't claim exact precision, but it's been proven over the past handful of years that we've got a pretty good sense of the industry.

Nevertheless, more than a few service providers have responded to me with word that their new business pipelines are stronger than ever. They tell me that they are counting a huge slate of opportunities and are struggling to put enough salespeople out there to cover all those deals-in-waiting.

Why the gap?

From our vantage, many of the "opportunities" for which the provider community is marshalling their sales forces are really early-stage strategy situations -
cases where clients are trying to figure out whether there's a pony worth riding in the outsourcing ring. 

What is clear is that the marketplace needs more education, and clients don't appear ready to cut outsourcing deals as often as they did in the recent past. I'd appreciate hearing your thoughts on the demand scenario.