ISG Provider Lens™ Quadrant Reports

Telco-to-Telco Deals Fuel Record Third Quarter for Outsourcing

By Mark Mayo, Partner & President, Global Resources Management, TPI

This quarter showed record performance, but not enough to lift the YTD results to 2008 levels. Very importantly, several large and unique contracts in telecommunications were responsible for a significant portion of the quarter’s performance.  Highlights for the quarter include:

  1. A few very large Telco-to-Telco contracts — instances where one telecommunications carrier outsources its network operations requirements to another telecommunications service provider —accounted for more than 30 percent of the Broader Market’s total contract value (TCV).
  2. Resurgence in mega deals, or contracts valued at US$1 billion or more, occurred both with and without Telco-to-Telco deals.
  3. Significant IT outsourcing TCV growth, driven primarily by Telco-to-Telco deals, took place, with Broader Market BPO (contracts >$25M in TCV) continuing to lag. BPO outsourcing adoptions continues at the smaller contract level (<$25M in TCV).
  4. The number and TCV of contracts signed in Asia Pacific increased substantially, with and without the impact of Telco-to-Telco.. Year-to-date, the region’s TCV has already exceeded the value of its contract awards for all of 2008.

Based on the tradition of strong fourth quarters, and a more robust industry pipeline, we expect positive movement in the marketplace during the next 6 to 9 months.