IDC Reports Worldwide Outsourcing Spending Is Increasing, Contract Deals Are Bigger Than Ever

FRAMINGHAM, MA – MAY 24, 2001 – Outsource spending continued its climb in 2000, with some of the largest-scale deals to date. IDC analysis of the top 100 outsourcing deals in 2000 reveals contract expenditures reached almost $56 billion. The contracts ranged from $58 million to $7.5 billion, with the highest number of deals falling between $100 million and $249 million.

 

"IS outsourcing engagements typically dominate the list of the largest deals. Moving forward, a growing number of outsourcing contracts – specifically those with the highest values and broadest range of services – will encompass BPO and Internet-related services," said Cynthia Doyle, program manager of IDC’s IT and Offshore Outsourcing Strategies research. "As the new economy spreads to a global scale, companies from diverse regions will need greater assistance in managing IT and business functions to remain competitive. The dynamic nature of our world that is largely based on information technology will guarantee a continued strong demand for outsourcing."

According to IDC, the number of megadeals – contracts valued at over $1 billion – flourished in 2000. Seventeen megadeals were signed, an almost 50% increase over those signed in 1999. Many of these deals involved a partnering effort. "In 2000, vendors collaborated to gain a competitive advantage and bid for some of these large contracts by teaming together to create multivendor arrangements," Doyle said.

In 2000, 59% of the top 100 outsourcing contract deals were consummated outside the United States. Although the United States remained the most active region in terms of new deal signings, with 35, Europe established itself as a very sound outsourcing market; it ranked second with 34 signings and first in contract value in 2000. Japan, not previously a hotbed for outsourcing, signed five deals, one of which was the largest in outsourcing history. The United Kingdom was the booming outsourcing region in 2000, signing 22 deals. "The U.K.’s outsourcing growth is mainly due to the waves of privatization and the upgrade of IT services, as well as having to deal with a competitive economic region and euro integration," Doyle added.

In a new report titled IDC’s Top 100 Worldwide Outsourcing Deals of 2000 (IDC #B24482), IDC reports on contract terms, outsourcing activity, and overall global happenings in the outsourcing industry. This report contains contract details within the following categories: IS outsourcing, processing services, business process outsourcing (BPO), applications outsourcing, network outsourcing, and desktop outsourcing. To purchase this report, contact Jim Nagle at 1-800-343-4952, extension 4549, or at jnagle@idc.com.

About IDC

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 700 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

 

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