Top 100 Contracts Suggest a Bright Future for the Outsourcing Services Market, IDC Says
FRAMINGHAM, MA – JUNE 9, 2003 – Although growth in spending on outsourcing services slowed in 2002 compared with prior years, IDC remains optimistic about the future of the outsourcing services market. In a new study, IDC reveals that in 2002, the 100 largest worldwide outsourcing contracts ranged in value from $80 million to $5 billion, with the highest-priced contracts covering the widest range of IT services. Forty-three percent of the contracts were valued between $100 million and $249 million. This is a significant change from 2001, when contracts valued at less than $100 million represented the largest price grouping.
"Outsourcing vendors have a tremendous opportunity to expand their client base in these tough economic times by providing efficient, cost-effective outsourcing services," said David Tapper, program manager for IDC’s IT Outsourcing and Utility Services research. "With a slow economic recovery on the horizon and pent-up demand ready to be released, we predict increased growth in spending on outsourcing services over the next couple of years. This should translate into plenty of big outsourcing deals, which IDC will capture and analyze in future top 100 reports."
Key findings reported in this new document include the following:
The strongest regional market for high-value outsourcing contracts was the Americas.
Three industries – banking, central government, and communications and media – primarily outsourced responsibilities for IS in 2002.
Megadeals (contracts valued at $1 billion or more) increased in 2002. Eleven deals were signed in 2002 as opposed to 8 in 2001, representing a 37.5% increase.
The tier 1 vendors – companies with a wide scope of outsourcing service capabilities, vast geographic reach, and a target market that includes the "big" deals (i.e., IBM Global Services, EDS, and CSC) – won about 54% of the top 100 deals of 2002.
The most active clients in terms of signing big outsourcing contracts were large companies (10,000 or more employees).
The study, IDC's Top 100 Worldwide Outsourcing Deals of 2002 (IDC #29449), is an overview of the top 100 worldwide outsourcing contracts of 2002, ranked by total contract value and analyzed by value, length, geographic scope, signing date, and vendor. Using information gathered by IDC from outsourcing vendors themselves, as well as information collected from vendor Web sites and other industry sources, this study examines the trends and characteristics of outsourcing contracts signed in 2002 valued at $80 million or more. Because several contracts were signed at the same price point, this report contains information on 102 contracts.
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