Outsourcing Contracts Grow in Number, Decline in Value in 2006

Business Wire on January 10, 2007

While the number of outsourcing contracts signed in 2006 reached an all-time high, the value of the contracts fell 8 percent from the previous year, largely due to shorter contracts with smaller dollar values, according to TPI. Total contract value was $78 billion, an 8 percent decline from 2005, while annualized contract value (ACV) — an estimate of the average yearly revenue potential that may be derived from the 2006 contract awards — fell 7 percent. The BPO industry experienced its second consecutive year of double-digit TCV decline, largely due to fewer multi-process deals. Financial Services Operations outsourcing nearly doubled in TCV from 2005. Yet other areas of BPO, including CRM operations such as customer call centers, saw declines.