Outsourcing’s big six providers risk losing their market supremacy
as an estimated £55 billion worth of contracts come for renewal in
the next two years.
The six - Accenture, ACS, CSC, EDS, Hewlett-Packard and IBM –
currently own 72% of the contracts coming up for renewal, according
to research from sourcing advisory firm TPI. EDS and IBM alone
carve up £30bn of the market between them.
However, smaller offshore firms will put the six under
unprecedented pressure as less customers are automatically renewing
contracts without getting competitive bids first. TPI estimates
that 70% of contracts were competitive last year – up a third on
2004.
“The increasing level and diversity of competition, coupled
with a trend towards selective or single process outsourcing all
mean that providers cannot rest on their laurels,” says Duncan
Aitchison, managing director of TPI.
Increased competition will benefit customers. “This could mean
significant changes in price and scope from the original contract,”
adds Aitchison.
More deals were signed in 2005 than ever before, but 70% were small
to medium-sized contracts, valued at £30m to £115m, which favour
offshore players.
Indian companies rarely win contracts above £115m, but of the 30%
of contracts they were invited to pitch for, they won 70% in this
lower bracket.