India leads global BPO growth

The outsourcing market in Asia Pacific grew substantially in 2007, fuelled primarily by increased demand from corporations based in India, say the latest TPI Index from sourcing advisory firm TPI.

Outsourcing in Asia Pacific saw its second consecutive year of strong growth and showed an increase in demand across all measures. Although the number of contracts signed in 2007 grew by just 4 per cent, their total contract value increased 30 per cent year over year from $9.9bn to $12.8bn and annualised revenues showed a 13 per cent increase, nearly double that of the global average. Asia Pacific was the only geography to show an increase across all of these measures.

The average value of outsourcing contracts in Asia Pacific increased by 25 per cent, from $141mn to $176mn, largely due to the increased mega relationship activity in the region, especially in the last quarter of 2007. The region showed particular strength in mega relationships with nine deals signed in 2007 at a total value of $1.5bn. This represents one third of the mega relationships globally and contrasts sharply with the region's overall share of one-sixth of the global outsourcing market.

Larger contracts have become popular among companies based in Asia. In addition, BPO performance in Asia-Pacific was particularly strong in 2007. BPO TCV in the region soared by 101 per cent, yielding the best year ever for BPO contract values in the region and leading average BPO contract value to increase by 81 per cent.

Outsourcing growth in Asia-Pacific was largely driven by companies in India and China. These countries traditionally known as outsourcing destinations are becoming buyers of outsourcing. India has seen stepped up outsourcing activity within the telecommunications and financial services sectors whereas growth in China has been strongly influenced by a single telecommunications mega deal.