Outsourcing deal restructuring exceeds new contracts in value

The latest research from ISG has revealed that contract restructuring contributed more to the EMEA outsourcing sector than new deals, in the first three months of this year.

Renegotiations accounted for $0.97bn and new deals $0.94bn in the EMEA region in the first three months of this year. This compared to the global total where new deals were worth $2.1bn and renegotiations $1.8bn.

In the Americas the value of new deals in the quarter was $0,84bn compared to $0.73bn for new deals. And Asia pacific new deals reached $0.36bn and renegotiations $0.08bn.
So why is it so high in the EMEA? The EMEA is dominated by Europe.

There could be multiple reasons for more than average outsourcing renegotiations and fewer new contracts.

The Euro crisis is hitting Europe pretty hard as well as government cost cutting. This is going to drive businesses to revisit their contracts and try to the scope and the price. In this business climate suppliers are willing to listen.

Then there are new delivery models emerging or reemerging. For example cloud computing is maturing and businesses will want to use these in some instances, which will drive contracts to be restructured. Again suppliers will be eager to get a piece of this and they know there is stuff competition.

But I suppose the overriding factor is that during these tough times businesses want to get their existing deals in order before they sign new ones.