by CIO Staff

IT Outsourcing Revenues Decline

Jan 12, 20061 min

Sourcing advisory firm TPIcited a record number of global outsourcing contracts in 2005, according to its quarterly TPI Index on the state of the global outsourcing industry released yesterday. Fourth-quarter results lifted 2005 to the highest number of outsourcing transactions ever awarded for contracts of $50 million and up – 293 contract, up from 269 in 2004.

But despite a December surge in mega-deals (TPI report three billion-dollar-plus contracts were signed), total outsourcing value dipped five percent year over year. TPI noted that IT outsourcing has been marked by steadily declining, single digit revenue growth of late and, if the trend continues, 2006 and 2007 “will witness the first years for absolute decline in overall revenue derived from commercial IT outsourcing.” But business process outsourcing is expected to grow between 10 and 15 percent this year.

The TPI Index also revealed an “unprecedented” concentration of contract restructuring in 2005, with a significant number of mega-deals being reworked.

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–Stephanie Overby