Outpaces Japan, Australia as the largest market for outsourcing contractsIn the first half of 2007, India outpaced Australia and Japan as the largest market for outsourcing contracts in the Asia Pacific region by awarding a total of $1.68 billion worth of contracts. This accounted for 30% of the total contracts awarded in the region. According to a study by sourcing advisory firm TPI, the traditional strong markets like Japan and Australia were number two and three, respectively, as the market for outsourcing contracts. While Japan with a share of 22.6% of the total number of outsourcing contracts in the APAC region contributed $1.24 billion, Australia's market share was 20% to $1.1 billion. "We see this is a as one-time phenomenon since India's strong growth as an outsourcing market may not last long. The growth was driven mainly by the Idea Cellular and Reliance outsourcing contracts which in combination contributed about $1.3 billion to the total contract value (TCV) of $1.7 billion," said Siddharth Pai, partner and managing director, TPI India.During the period, Asia-Pacific with an outsourcing contracts of about $5.5 billion, saw an increase of 100% over the same period in 2006. "Traditionally, the Asia Pacific outsourcing market has been seen as relatively immature in contrast to American and European markets. However, strong performance in the region in 2006 has carried on through the first half of 2007 and we have seen three straight half years of growth in new business demand," he added. During the six-month period, says TPI, there is a clear slow down in the rate of growth of outsourcing on a global scale. The number of new scope contracts during the period as compared with a similar period last year, dropped by 16% whereas TCV went up 6.2%. The annualised contract value (ACV) of new scope contracts went up 5.8%. Pai said this indicated that TCV of new scope contracts went up due to the larger deal size, as against the smaller contracts that were noticed earlier. In the global market, the average TCV of new scope contracts was $245 million, a growth of 20% as compared to the same period in 2006. In the broader market (globally), the number of contracts including the renewals signed during the period saw a fall of 25% in the six months period of 2007 year-on-year, whereas the TCV of contracts dropped by 23% and ACV of contracts dropped by 30%. In the service providers market in the contracts of over $50 million size, the India-based service providers had just 4% share in the year 2007 till date, as against a 6% share in the full year 2006. TPI says that there is, however, no sign of slow down for the Indian service providers, who usually don't pitch for very large contracts.
