Outsourcing contracts fell at end of 2012


The value of IT outsourcing contracts in the fourth quarter last year fell 37 percent from the same period in 2011, according to the consulting firm Information Services Group. The $2.9 billion decline was largely the result of a reduction in contracts for new services, reports CIO magazine's Stephanie Overby.

Recent research by KPMG also found that interest in outsourcing in 2012 was less about making new deals than about improving the management of existing contracts, Overby reports. Nearly three quarters of the 400 sourcing advisors KPMG surveyed said that the demand for outsourcing had fallen or remained flat in the second half of last year.

In 2013, there could be continued downward pressuring on outsourcing, and providers are starting to look at emerging markets for new contracts. While U.S. companies signed $6.77 billion in outsourcing contracts last year--lower than the five-year average--firms in the Asia Pacific region signed contracts for more than they had ever before.

Service providers should "rethink their approach to the market and their relationships with clients," said John Keppel, president and CMO at ISG. One area of potential outsourcing expansion is in infrastructure-as-a-service.

For more:
- see Stephanie Overby's article at CIO

Related Articles:
Evolving sourcing needs spur changes in provider, customer relationship
Reasons to consider insourcing
Why outsourcing isn't going away