IDC study of the top 100 outsourcing deals in 2004 reveals
fundamental changes in the outsourcing marketplace, including
a dramatic shift to more business process outsourcing
(BPO), an increase in the number of players, and a reduction
in total deal value. These developments reflect increased
competition and expansion in the marketplace, and create
pressure for traditional outsourcers to alter their business
models in order to successfully compete in the coming
value of the top 100 outsourcing deals in 2004 decreased
by 1.2 per cent from $69.1 billion in 2003 to $68.3 billion
in 2004. However, qualifying for the top 100 in 2004 required
a minimum deal value of $184 million, a 5.1-per cent increase
from 2003. The study also found that the share of BPO
and processing services deals in the top 100 outsourcing
deals increased from 15.2 per cent in 2003 to 25 per cent
in 2004, while the share of IT outsourcing services suffered
a decline to 75 per cent of the 2004 market.
world of deal making for large outsourcing contracts in
2004 saw a slight decline in signings by total value,
a reduced number of megadeals valued at $1 billion and
higher, an increase in the number of players competing
in this segment, and a shift to more business process
outsourcing deals as part of the mix," said David
Tapper, director of IT Outsourcing, utility, and offshore
services research at IDC.
shifts, along with other key trends in the market, such
as customer need to lower costs and increase productivity,
are creating fundamental changes in the outsourcing marketplace.
In order to compete, players need to radically alter their
business models to include newer service capabilities,
involve different ecosystems of partnerships, target ''non
IT'' opportunities, and seek new customers in the SMB and
consumer spaces as well as emerging markets."
study found that the number of players participating in
the top 100 deals increased from 26 in 2003 to 34 in 2004.
While just three players captured 55.6 per cent of the
contract value for the top 100 deals in 2003, seven were
needed to reach roughly the same amount (55.9 per cent)
in 2004, with IBM leading the way followed by CSC, EDS,
Atos Origin, HP, Accenture, and Fujitsu.
the value of deals captured by Asia / Pacific (APAC)-based
contracts, though still small, showed a jump from 0.7
per cent of total deal value in 2003 to 3.9 per cent in
2004. Europ-r, Middle East and Africa (EMEA)-based players,
as determined by headquarters, increased their take of
these deals from 21.7 per cent in 2003 to 38.9 per cent
in 2004, while Americas vendors saw a decrease from 76.7
per cent to 56.3 per cent during this same period.
study, IDC''s Top 100 Worldwide Outsourcing Deals
of 2004 provides an overview of the top 100 world-wide
outsourcing contracts of 2004, ranked by total contract
value, and examines the trends and characteristics of
outsourcing contracts signed in 2004 valued at $184 million
or more. The study presents the outsourcing contract winners,
outsourcing contracts by vendor headquarters, contract
values, contract lengths, quarterly view, geography, and
industry. IDC gathered information for this report from
the outsourcing vendors themselves, vendor web sites and
other industry sources.