The Hindu Business Line : BPO sector posts 5 pc growth: Study

The outsourcing business in the first half of 2006 has both good and bad news. The good news is that mature Indian service providers have achieved significant growth and are winning relatively larger and more varied deals. This year, their market share had risen to 5.1 per cent of the total contract value signed compared to less than 3 per cent during the corresponding period in 2005.

The bad news is that the number of mega deals (more than $1 billion) itself is reducing (about 6.1 per cent drop from last year) and contract periods are getting shorter. And, with traditionally, third quarter being weak months for outsourcing, it would be an uphill task to reach the value and volumes expected from the outsourcing market this year.

According to a study by TPI India, a sourcing advisory solutions firm, the global outsourcing market is slightly ahead of the same period last year in terms of the total contract value (TCV), supported partly by 92 BPO contracts signed during the first half of 2006.

The 92 contracts are valued at $11 million, a 20 per cent gain in BPO TCV this time last year.

An analysis of deals, on which TPI is now advising, shows that 47 per cent of these involve offshoring compared to 28 per cent during the corresponding period last year.

Mr Siddharth Pai, Partner and Managing Director, TPI India, said that out of the total 150 deals closed in the county in the first half, about 23 per cent involved restructuring and renewal of existing contracts.