Outsourcing on the up

Growth in outsourcing services slowed in 2002 compared with prior years, but IDC remains optimistic about the future. It adds that the 100 largest worldwide outsourcing contracts in 2002 ranged from US$80 million to US$5 billion.

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By  Neil Denslow Published  June 11, 2003

Growth in outsourcing services slowed in 2002 compared with prior years, but IDC remains optimistic about the future. The analyst house says that the 100 largest worldwide outsourcing contracts in 2002 ranged in value from US$80 million to US$5 billion, with the highest-priced contracts covering the widest range of IT services. 43% of the contracts were valued between US$100 million and US$249 million, which represents a significant change from 2001, when contracts valued at less than US$100 million represented the largest price grouping.

“Outsourcing vendors have a tremendous opportunity to expand their client base in these tough economic times by providing efficient, cost-effective outsourcing services,” says David Tapper, program manager for IDC’s IT outsourcing & utility services research.

“With a slow economic recovery on the horizon and pent-up demand ready to be released, we predict increased growth in spending on outsourcing services over the next couple of years,” he adds.

Among IDC’s key findings was the fact that the strongest regional market for high-value outsourcing contracts was the Americas. Three industries — banking, central government and communications & media — primarily outsourced responsibilities for IS in 2002.

Megadeals, contracts valued at US$1 billion or more, increased in 2002. Eleven deals were signed in 2002 as opposed to 8 in 2001, representing a 37.5% increase. The tier 1 vendors, such as IBM Global Services, EDS and other companies with a wide scope of outsourcing service capabilities, vast geographic reach and a target market that includes the "big" deals won about 54% of the top 100 deals of 2002. The most active clients in terms of signing big outsourcing contracts were large companies, those with 10,000 or more employees.

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