Outsourcing IT

Despite the global annual contract value (ACV) for the first half of 2015 ($6.2 billion) declining seven per cent year-on-year, it has been revealed that numerous world-wide outsourcing records have been broken in the second quarter of this year.

Outsourcing IT services that are not a primary activity or strength of a business can save significant time. Performing tasks that are not their area of expertise can be time consuming, whereas another company that specializes in that particular area can accomplish the task much more quickly. By eliminating those time consuming projects or tasks, you can be more efficient and free up time to focus on your core business.

digital-art-182223_640As sources report, a record number of 451 contracts valued at $5 million or more were signed in the second quarter of 2015, along with a high of 754 agreements in the first half of the year. These achievements were all managed despite a lacklustre first quarter – pointed out by the industry experts as one of the slowest quarters of the last decade.

According to experts, the sharp increase in outsourcing IT activity has come as buyers continue to negotiate a higher number of deals at a lower value, opting to avoid getting locked into cumbersome, long term contracts at a time when a wave of new technologies and operating models are causing significant disruption in the ITO and BPO markets.

Also, sources report that from the start of the recession in 2008 until now, counts have nearly doubled, while the ACV has risen only modestly. Technology has changed significantly during this period, which saw the beginning of the digital as-a-service revolution in IT sourcing and its continuing pervasive impact on the global services market. It’s particularly noteworthy that ACV rallied from a dismal first quarter to pass the $6 billion mark without any significant aid from mega-relationships this quarter. The second quarter had only two deals with ACV greater than $100 million, a low not seen in many years. Clearly, it’s the size of the demand, not the size of the deal, that is driving this market, experts point out.