Asia Pacific is becoming the next hot destination for outsourcing contracts. The region recorded annual contract value (ACV) during 2012 of $3.1 billion, a 55% increase over the previous year, said the Asia Pacific TPI Index.
The steep rise was driven by new scope awards, which accounted for 88% of the contracts awarded, as well as record performances by emerging markets and business process outsourcing (BPO). TPI Index, part of the Information Services Group, which measures commercial outsourcing contracts valued at $5 million or more.
“Asia Pacific’s robust 2012 performance contrasted sharply with the wider global picture in which Europe struggled and the Americas remained flat. Moreover, in contrast to peaks and troughs recorded in the other regions, the number of contract awards here has followed a pattern of consistent growth,” said Sid Pai, Partner & President, ISG Asia Pacific.
The number of outsourcing contracts awarded in the region also climbed, rising 6% year-over-year to 134. Asia Pacific was the only region of the world in which either ACV or contract counts increased during 2012.
Some of this growth is also reflected int he growth numbers of SAP, Oracle and IBM. All these companies saw growth from APAC in the higher double digit numbers.
By scope, business process outsourcing (BPO) had its best year ever in 2012. The $1.4 billion of ACV in the segment represented a 133% rise over 2011, led by contracts for Contact Center and Industry-Specific BPO. The total number of BPO contracts awarded in Asia Pacific has doubled since 2007.
IT outsourcing (ITO) accounted for $1.7 billion of the region’s ACV, a rise of 21% year-on-year. The number of contracts awarded rose 16% to 87, the highest count for ITO in Asia Pacific since 2009.
By country, the emerging markets in Asia Pacific also experienced record activity in 2012. India and South Asia increased their ACV 175% to $1.5 billion, China’s ACV more than tripled year-over-year to $400 million, and the ASEAN countries more than doubled their ACV to $220 million.
In fact, every country registered growth in 2012 except Australia/New Zealand (ANZ). The region’s most mature market saw ACV drop 40% to $690 million for the year, enabling India and South Asia to surpass it as the largest market in Asia Pacific.
“Within Asia Pacific, we see some mixed signals that make it difficult to predict market performance in the next half year. The rise in BPO activity in the region has been remarkable, as has the growth in the emerging markets. However, economic factors affecting the rest of the world are beginning to be felt in the region - especially in Australia and India - so it remains to be seen whether 2013 can sustain 2012’s robust levels,” said Pai.
