Outsourcing contract values plummet


Outsourcing contract values plummet

Karl Flinders

The total value of outsourcing contracts in the first quarter of this year dropped by 44% compared to the same period a year ago despite a growth in the number of deals.

According to the latest research carried out by sourcing consultancy TPI the first three months of 2009 saw Euros7bn worth of outsourcing contracts signed in the EMEA region.

This represents a 14% fall from the previous quarter and a massive 44% drop from a year ago, as companies cut costs by signing smaller outsourcing contracts.

The research found that although the number of outsourcing contracts has grown quarter on quarter, the average contract value fell 29% from Euros148m to Euros105m.

"We are seeing a growing tendency for companies to award more outsourcing contracts, though of smaller value," said Duncan Aitchison, president, TPI EMEA. "This is primarily the result of tactical initiatives meant to address a specific challenge, typically around cost reduction."

He said contract values will increase when the economy recovers.

A total of 141 contracts valued at €15.4bn were signed globally, with 68 in Europe the Middle East and Africa.

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