Outsourcing keeps head above water in Q1

Latest TPI figures reveal a 28 per cent quarter-on-quarter drop, but performance still hailed as one of the strongest in the last decade

The EMEA outsourcing market continued to hold its own in the first quarter of 2011, fuelled by the recovery of business process outsourcing and a number of very big deals.

According to data released by information services group TPI, total contract value (TCV) for the quarter hit €8.1bn, a 28 per cent quarter-on-quarter drop, but only a five per cent drop year on year, which made it one of the stronger Q1 performances of the last decade.

To compare, the global market hit just €14bn in TCV, its worst first-quarter performance in a decade. The BPO sector awarded €3.2bn in TCV, more than triple the total in both the previous quarter and Q1 2010 – the highest in two years.

Duncan Aitchison, EMEA partner and president at TPI, said: "The resurgence of BPO activity during the first quarter of 2011 is a very encouraging sign for the outsourcing market in EMEA.

"If the tempo of awards continues throughout the year, BPO activity will easily surpass the region’s 2010 results."

Despite the drop in TCV, the number of contracts signed during Q1 remained steady year on year in both EMEA and globally, reflecting the ongoing trend towards smaller contracts.

Drilling into sectors, telecom & media and energy accounted for 66 per cent of TCV in EMEA during Q1 2011, mainly due to large deals. Financial services, usually one of the strongest sectors, dipped quarter on quarter, accounting for just eight per cent of TCV.

“The outlook for the rest of 2011 suggests a healthy level of contracting activity and a modest amount of restructuring in the mix. Overall, we are cautiously optimistic about next quarter and more bullish about the second half of 2011,” said Aitchison.