Global Outsourcing Contract Volume Set to Climb in 2010

HOUSTON, March 18 /PRNewswire/ -- TPI, the largest sourcing data and advisory firm in the world and a unit of Information Services Group, Inc. (ISG) (Nasdaq: III, IIIIU, IIIIW), an industry-leading information-based services company, today released research predicting that the number of outsourcing contracts awarded globally will rise in 2010 as organizations look for new ways to optimize critical business operations in an improving economy.

The growing acceptance of cloud computing, increasing interest in multi-sourcing, and emerging focus on governance and risk management will fuel outsourcing contract volume this year, according to predictions contained in the new TPI Momentum Market Trends & Insights 4Q09 Annual Report. However, the Report notes, these same factors will narrow the scope of individual outsourcing projects, driving down their value and duration and intensifying competition among service providers.

The Report also notes that 422 outsourcing contracts valued at $15 billion are expected to expire in 2010, a 40 percent increase over the total contract value of last year's expiring awards and the highest level in five years. Many are large contracts signed when the global economy was stronger that will be broken up and awarded in smaller transactions, providing another boost to contract volume this year, TPI predicts.

"The question on many outsourcing professionals' minds entering 2010 was whether the fourth quarter of last year was the typical end-of-year bounce or the beginning of a recovery in the industry," said John Keppel, Partner and Managing Director, TPI Research. "We believe it was both. With the outlook of the global economy still uncertain, clients are clearly turning toward smaller, lower-risk transactions that focus on short-term cost savings."

The TPI Momentum Market Trends & Insights 4Q09 Annual Report uses the unique market data and fact-based observations gathered by TPI advisors and researchers in the past year to provide guidance and strategy for 2010. It identifies the trends and transactions that will shape the outsourcing industry going forward, not only documenting spending levels and contract awards by region and service line but also identifying the client motivations and service provider strategies behind them and offering advice for market participants.

Through its Pursuit Effectiveness Research, TPI is able to analyze contract award trends to understand what separates winning and losing service providers. For example, while pricing is always a prominent factor cited by buyers, it became significantly more important in last year's recessionary environment based on ratings of winning service providers' strengths, the Report notes. Also ranking high among winners' strengths were terms, stability, strength of existing relationship, and technology & tools, all reflecting clients' desire for tactical solutions that deliver reliable, low-risk savings.

TPI also found that only slightly more than one-third of outsourcing proposals directly met buyers' objectives in 2009, down from nearly half the year before. While no service provider would intentionally fail to respond to a prospective client's needs, proposals frequently fall short or reflect misguided attempts to fit an existing solution into the buyer's problem, the Report notes. Meanwhile, proposals that meet all of a client's requirements have twice the chance of winning as those that deliver on only some, though the latter often aren't eliminated until much later in the process and after significant investment by the service provider in the pursuit.

Says Paul Reynolds, Chief Research Officer, TPI Momentum: "Having a strong understanding of a client's objectives and developing a proposal that directly meets the client's needs are critical to winning pursuits. Although sales best practices have not changed, outsourcing services buyers continue to evolve, and service providers that don't evolve in tandem may fail to put their best foot forward when pursuing every opportunity. The TPI Momentum Market Trends & Insights 4Q09 Annual Report has the intelligence to help them avoid that."

Other highlights of the Report include:

• Helped by their legacies and capabilities in IT outsourcing (ITO) and a perception that they are less risky choices due to their sizes and reputations, the Big 5 Americas firms increased their share of the overall market during 2009 by 9 percent.
• Mega-deal activity in 2010 should continue at a pace consistent with last year's second half with more activity in the less mature outsourcing markets as multi-sourcing and other trends dampen it in the more mature markets.
• Service providers will continue to need different go-to-market strategies for each geographic region. While the ITO market in the Americas has been fairly consistent for the last three years, Europe has now surpassed it, setting a record for the highest spending in one year, and Asia Pacific had its fifth consecutive year of growth.

The TPI Momentum Market Trends & Insights 4Q09 Annual Report is available now. For more information and to view a summary, please visit http://tpi.net/resources/service_providers/TPIMomentum.html.

About TPI

TPI, a unit of Information Services Group, Inc. (ISG) (Nasdaq: III, IIIIU, IIIIW), is the founder and innovator of the sourcing advisory industry, and the largest sourcing data and advisory firm in the world. We are expert at a broad range of business support functions and related research methodologies. Utilizing deep functional domain expertise and extensive practical experience, our accomplished industry experts collaborate with organizations to help them advance their business operations through the best combination of business process improvement, shared services, outsourcing and offshoring. For additional information, visit www.tpi.net.

About Information Services Group, Inc.

Information Services Group, Inc. (ISG) (Nasdaq: III, IIIIU, IIIIW) was founded in 2006 to build an industry-leading, high-growth, information-based services company by acquiring and growing businesses in advisory, data, business and media information services. In November 2007, the company acquired TPI, the largest independent sourcing advisory firm in the world. Based in Stamford, Conn., ISG has a proven leadership team with global experience in information-based services and a track record of creating significant value for shareowners, clients and employees. For more, visit www.informationsg.com.

SOURCE TPI