Global outsourcing market is sizzling

In its latest report global sourcing advisory firm TPI has indicated ‘the first quarter of 2006’ as the strongest quarter ever for outsourcing contracts. The report says 83 contracts have been signed so far this year worth $22.7 billion in total contract value (TCV). TPI India’s managing director Siddharth Pai said the strong quarter is the result of rise in the number of contracts being restructured. “Restructurings of first-generation agreements have yielded an increased impact on both the volume and the value of contracts in the broader market this quarter,” he said. The report also claims that financial savings available from outsourcing have been greatly over-estimated. Opinions vary widely about the cost savings to be gained from outsourcing. This study proves that the promise of massive operational savings is unrealistic if the costs of procurement and ongoing contract management are taken into account. “In our experience, outsourcing arrangements which focus solely on delivering huge savings often fail to meet client expectations,” added Mr.Pai.