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Outsourcing spend tumbles in 2010

Businesses favour multi-sourced and restructured deals...

Businesses favour multi-sourced and restructured deals...

Company spending on new outsourcing deals fell in 2010, according to industry research.

The total value of new IT and business process outsourcing deals being signed by companies fell between 2009 and 2010 - declining 24 per cent in Asia Pacific, 14 per cent in Europe, the Middle East and Africa and three per cent in the Americas, according to research by outsourcing advisory firm TPI.

Globally, financial services firms struck deals worth a total of $25bn in 2010, a slight increase on the value of deals agreed by the sector in 2009, while the value of deals agreed by telecoms and media firms fell by half between 2009 and 2010.

Firms concentrated on restructuring existing outsourcing agreements last year - with the value of restructured deals agreed in 2010 rising 39 per cent year on year, while the value of deals for new outsourcing work fell by 25 per cent over the same period.

Companies are favouring multi-sourced deals where they buy services from several vendors rather than a single supplier

Companies are favouring multi-sourced deals where they buy services from several vendors rather than a single supplier
(Photo credit: Shutterstock)

The research also found that more than half of companies, 53 per cent, are making use of multi-sourcing - where companies source IT and business process services from multiple vendors - up from 30 per cent of companies in 2000.

During the fourth quarter of last year, the TPI research found that companies signed new contracts worth a total of $22bn, down 30 per cent on spending during the same period in 2009, but up almost 30 per cent on the previous quarter.

Separate research by the outsourcing advisory firm Equaterra also found sluggish demand for business process and IT outsourcing in the fourth quarter of 2010, with less than half, 48 per cent, of Equaterra's advisers reporting an increase in demand for new deals.

The report predicted that the global market for outsourcing will grow moderately in 2011, and forecast demand for cloud computing services.