PI's Q1 index shows a changing trend :

PI's Q1 index shows a changing trend :
- 1Q07 TCV and ACVSoft market, especially in the Americas and in BPO
- Adoption of Outsourcing activity in managed network services outsourcing within the relatively flat ITO market.
- Lessened restructuring impact on broader market
- Business Process Outsourcing recorded a recent low point by number and TCV
- Shift away from large multi-process BPO agreements to single-function contracts of a smaller size

This is surprising - one hopes that this is a passing trend considering that the year 2006 ended on a positive note for the outsourcing industry. Several positive datapoints clearly pointed to that. Some of them were:

- Market indices for contract length and value rose for the first time since 2003.
- "Megadeals" were on track to match or exceed 2005 levels.
- The number and value of outsourcing deals above $1 billion for an individual service provider, or megadeals, are poised to increase in 2006 after seven years of gradual declines.
- The average outsourcing deal contract value
increased 55%, from $201 million in 2005 to $312 million in 2006.

Today no one is feeling the pinch owing to reduced contract awards that much because there's no erosion of marketshare. Service players maintain that while there has been a talk about slowdown and all those things, they believe that the global IT service industry continues to show a strong growth.

Hopefully things will change moving forward vindicating this position.

Europe Ruling in BPO Market

The value of BPO contract awards in Europe increased 80% over the past twelve months while BPO contract value in North America declined by 16% over the same period, shows NelsonHall's BPO index

by Global Services

Global Services

Business Process Outsourcing (BPO) activity over the past twelve months has been much stronger in Europe than in North America, says BPO Index for Q1 2007 released by NelsonHall — a BPO analyst firm. The index shows a strengthening of the pattern observed in 2006, with BPO growth in Europe being maintained and an accompanying relative level of stagnation in the North American BPO market.

The first quarter was the best first quarter for BPO contract awards in five years in Europe . The value of BPO contract awards in Europe increased 80% over the past twelve months while BPO contract value in North America declined by 16% over the same period. On a rolling 12-month basis, Europe now accounts for 50% of global BPO contract activity, overtaking North America with a 40% share of BPO contract value over the period.

The BPO index reveals an increasingly widespread adoption of BPO across Europe , particularly in Benelux and Central Europe , which between them accounted for 13% of BPO contract value in Europe over the past twelve months.

Despite this shift in emphasis to the European market, there are some encouraging signs. While North America BPO contract activity still has some way to go to recover to the peaks of activity in Q1 seen there between 2002 and 2004, the level of BPO contract activity in North America in Q1 2007 was significantly better than in the first quarters of 2006 and 2005. If this level of improvement repeats itself during the next three-quarters in North America , then 2007 is likely to surpass 2005 and 2006 in North America and form something of a recovery in the BPO market there.

While BPO is taking place outside Europe and North America, notably in high cost economies such as Japan and Australia, and in support of infrastructure development in the emerging economies, the contribution to the BPO market from these additional markets remains at approximately five percent of the total market.

Overall outsourcing contract value awarded globally increased nine percent to $61.7 billion, while global BPO contract value awarded increased 17% to $17.8 billion.