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IT and Services and BPO Contract Sizes Fall 47% in Q2 2005
Based on figures from Datamonitor's IT Services Contracts Tracker, the average size of contracts announced by IT and BPO services vendors in the second quarter of 005 fell to $56m compared to $106m in the year ago period. This means that average deal size has now declined for four consecutive quarters.
Datamonitor's "IT Services Contract Tracker," is the most comprehensive and up-to-date guide for contracts within the global IT services market. The service tracks every new outsourcing, systems integration and consulting deal with a value greater than $1m signed by major IT services vendors, and contains information on more than 7,500 contracts signed during the last five years.
Datamonitor tracked a total of 447 deals during the second quarter of 2005, which represented a
This decline in average deal size was largely due to a fall in the number of mega-deals signed during the quarter. Datamonitor tracked three deals with a value greater than $1bn - two for IBM and one for BT Group, compared to six in the second quarter of 2004. The number of deals with a value greater than $100m also fell to 49 from 70 over the same period.
Nick Mayes, lead analyst for Global Computing Services at Datamonitor, noted: "Clients continue to take a more selective approach to outsourcing which is reducing the number of mega-deals that are up for grabs. Another of the major trends that while elusive to see in the publicly reported deals is the impact that the offshore Indian suppliers are having on the market."
"We are seeing phenomenal growth of suppliers like TCS, Infosys, and Wipro," says Michel Janssen, President of Supplier Solutions at outsourcing advisory firm Everest Group. "Their small projects wins are becoming larger, taking market share away from the traditional tier one suppliers. While most of their deals are not publicly reported we know by looking at their employee growth that they are continuing at a pace that is in the 30% to 40% range, and are threatening to become large enough to be classified as Tier one suppliers."
