From:	Baroni Limited [Baroni-Limited@tiscali.it]
Sent:	21 November 2007 21:05
Subject:	Baroni Limited - Offshoring Newsletter' - 31/07

Sensitivity:	Confidential

TPI index reveals fewer outsourcing contracts awarded in third quarter
TPI, has released its quarterly analysis of the global commercial outsourcing industry for the third quarter of 2007 through its TPI Index report. The TPI Index tracks and analyzes trends in transactions awarded by industry, geography and service provider, through commercial contract awards valued at a total contract value (TCV) of $50M and greater.

Through the first three quarters of 2007, the aggregate global number and value of these contracts have declined when compared to the same period in 2006. For this same period, the number of contracts awarded in the sourcing industry globally declined 16% compared to the first three quarters of 2006.

TCV attributable to contracts valued $50M or greater, approximately $48bn for the first nine months of 2007, was 17% lower than the comparable period in 2006. Annualized Contract Value (ACV) involving contracts valued $50M or greater also decreased 18% year-over-year.

In the Americas, a shift toward transactions with smaller contract values and shorter durations as well as fewer 'new scope' transactions (contracts in which no prior relationship existed) resulted in a decline in the number of contract awards involving TCVs of $50M or greater. New scope transactions were down roughly 43% in the Americas in comparison to the same time last year.  For the first nine months of 2007, demand for outsourcing services remained robust in Europe, the Middle East and Africa (EMEA) and Asia Pacific. New scope awards in Asia Pacific increased in value 72% from last year, fuelled by India and China. Europe registered a 36% increase in new scope awards year-to-date 2007 compared with the same prior year period.  Industry-wide average TCV has increased in EMEA to $26bn during the first nine months of 2007 compared with $22bn during the same 2006 period. For the first nine months of 2007, Europe accounted for more than a 50% share of the global Broader Market contracts signed for the first time. The Asia Pacific region increased its overall TCV by roughly $1bn year on year due primarily to a nearly doubling in the value of new scope contracts.

One of the more important underlying trends identified in the TPI Index included a shift toward more frequent use of the strategy of contracting for effort rather than outcomes for applications-related and Business Process Outsourcing (BPO) contracts. This trend was particularly pronounced in the Americas region. Clients in the Americas are more often awarding contracts for access to labour at favourable pricing, rather than contracting for defined services through the construction of an outsourcing agreement.

In addition, major India-based providers have seen their Americas-derived revenue grow by 37%, on average, on a year-over-year basis despite the slowdown in outsourcing contract awards in the Americas. India-based service providers are capturing opportunities at the lower end of the outsourcing contract-value spectrum. TPI has reported that many of the multi-national service providers are also participating in the new battle for the increasing number of smaller transactions.  'Those with a strong offshore footprint and niche expertise are capitalizing on the Americas' current lean towards smaller-sized contracts,' noted Peter Allen, partner and managing director of Market Development at TPI. '42% of the transactions we supported for our clients so far this year are less than $25M compared to only nine% five years ago. In addition, the overall demand for products and services we see in the market place is growing.'  Although the number of mega deals in 2007 remained the same as in 2006, TCV has declined from $17bn in 2006 to approximately $12bn in 2007. In addition, the number of mega relationships awarded year-to-date was down roughly 33% from 2006 levels. Mega relationships in the Americas declined from 22 for all of 2006 to four in 2007 year-to-date. Conversely, the regions of Europe and Asia Pacific are both on pace to meet or exceed their 2006 numbers for mega relationships.

Business Process Outsourcing (BPO) has continued to demonstrate sluggishness in contract awards. With 27 BPO contracts signed in the third quarter at a TCV of $4bn, this segment of the market was down quarter-over-quarter. Sixty-six BPO contracts, worth approximately $11bn to date, represent a year-over-year decline. While BPO is not exhibiting the growth the industry expected, its growth is contributing more to the Americas than to Europe or Asia Pacific. In fact, the Americas remain the predominant region to adopt BPO - by both number and TCV.	

	
Top Stories	
	
EMEA IT Outsourcing Deals Up by €1bn
Leading outsourcers in EMEA have reported stellar performances in Q2 2007 by closing 84 deals worth over €5.4bn, according to Forrester Research (Nasdaq: FORR). This is significantly more ' an increase of €1bn in aggregate deal value, and 19 deals ' than the same quarter in 2006. UK based companies have lead this growing outsourcing trend by closing 36% of all deals signed in EMEA (worth almost €2bn). According to other key findings, about 63% of the outsourcing contracts signed during the quarter included multiple service agreements as compared to 52% in 2Q 2006.
Book-keeping contracts to remain strong for BPOs: Study
Outsourcing will remain strong in 2008, with HR outsourcing contracts worth $1.1bn and finance & accounting outsourcing (FAO) contracts worth $600M coming up for renewal, according to offshoring advisory firm Everest Research Institute. In its study 2008 Market Predictions, the firm said that demand for FAO services will continue to be strong in the next 12-18 months, as large buyers in the exploratory phase begin to initiate actual engagements. 'On the supplier side, battle for market share will intensify. While companies like Accenture, Genpact and IBM hold over 65% share, companies like Xansa, WNS, HP, Infosys and Wipro are fast emerging as notable contenders,' the Everest study said.
O2 Ireland in talks to outsource 450 jobs to IBM, Ericsson
Mobile operator O2 Ireland is to outsource 450 staff from its IT services and network management departments as it seeks to cut costs. The move will see 230 IT jobs at O2 Ireland being outsourced to IBM by the second quarter of 2008.
Nielsen selects TCS for $1.2bn outsourcing deal
Nielsen has awarded a 10-year global information technology outsourcing (ITO) and BPO contract worth $1.2bn to Tata Consultancy Services (TCS). Under the terms of the contract, TCS will provide Nielsen with a variety of IT application, consulting, and BPO services and assist the media company in standardizing and consolidating its worldwide systems, technologies, and processes. The company will also be responsible for managing some of the finance and HR related business processes of Nielsen using its newly developed BPO platforms.
Continental Airlines Awards New IT Services Contracts to EDS and HP
Continental and EDS are partnering to migrate legacy airline applications to modern platforms. EDS will also manage Continental's compute environments, legacy applications, server and network administration, help desk and field services. HP will have the responsibility of updating Continental's airport environment and will also provide servers, storage, software and services for Continental's legacy application migration.
John Hancock's Outsourcing SMA Ops to JPMorgan
John Hancock announced this week that it's outsourcing its separately managed accounts administration to JPMorgan, we saw this as a reflection of three trends: separately managed accounts have become very popular, good operations staff have become hard to find, and firms that experience growth in an investment area are tending to outsource operations for it.
ABN AMRO Mellon wins €1.5bn Dutch mandate
ABN AMRO Mellon has been appointed by Stichting Bedrijfstakpensioenfonds voor de Meubelindustrie en Meubileringsbedrijven (Bpf Meubel) to provide global custody and related services for assets valued at €1.5bn.
Co-operative Insurance (CIS) and Capita Sign Ten-Year Partnership Deal
Co-operative Insurance (CIS), part of Co-operative Financial Services (CFS), has today (15th October) signed a ten-year partnership deal with The Capita Group Plc ('Capita'), which will see Capita deliver business processing activities to support the continued growth of CIS's Life & Savings administration operations.
Valley First Credit Union Signs Technology Agreement with Summit ...
Preferring to focus on serving its members efficiently rather than on maintaining the IT infrastructure that supports its core banking system, Valley First Credit Union of Penticton, British Columbia has signed a resource management agreement with Summit Information Systems, part of Fiserv Solutions of Canada, Inc. and a business unit of Fortune 500 company, Fiserv, Inc.
Carphone signs IT deal with Patni
The Carphone Warehouse has awarded a $200M information technology outsourcing (ITO) contract to Patni Computer Systems. According to the deal, Patni has been appointed as a strategic technology partner of The Carphone Warehouse. It will provide a wide range of services in consulting, systems integration, and application development and maintenance to The Carphone Warehouse.	
	
Service Provider News	
	
IBM announces usd73m outsourcing agreement with Hess Corporation
Hess Corporation has awarded a 5.5-year, $73M global ITO contract to IBM for providing a variety of IT infrastructure services, such as round-the-clock monitoring, managing, and troubleshooting Hess' servers and network worldwide. In addition, IBM will provide Hess with various IT services including service desk, centralized remote deskside management, asset tracking, and end user support services. The company will also provide server upgrades to Hess. IBM will use its worldwide delivery capabilities to offer these services for Hess's worldwide operations.
Watson Wyatt wins Emirates custody
Watson Wyatt has been appointed to provide pensions administration and accounting services to the Emirates Group Provident, the pension scheme of Emirates Airlines.
Satyam, Fujitsu in IT services deal for Reuters
Satyam Computer Services has entered into an agreement with Fujitsu Services for providing IT services to news agency Reuters as part of a 10-year, $1bn internal information systems transformation programme.
BNY Mellon Asset Servicing Wins Outsourcing Mandate with O'Shaughnessy Asset Management
BNY Mellon Asset Servicing, the global leader in asset servicing, has announced that it will provide managed accounts and institutional back office outsourcing support for O'Shaughnessy Asset Management LLC, a Stamford, CT-based quantitative investment firm lead by James P. O'Shaughnessy.
Midland Loan Services gains Cohen Financial L.P.
Midland will provide bank-office services, including payment processing, bank account reconciliation, real estate tax escrow and Uniform Commercial Code administration to Cohen Financial L.P.
Xerox Gets $82M Europart Contract
Xerox has been awarded a 7-year document management outsourcing (DMO) contract worth $82M by EUROPART to provide customer services and document processing support. Xerox Global Services will provide EUROPART with office and production print services, and invoice processing services
HR Xcel lands DAK Americas contract
HR Xcel has landed a contract to provide benefits and COBRA administration to DAK Americas of Charlotte. HR Xcel will provide the services to all of DAK's North American facilities.
Teleperformance planning major expansion in India, Philippines
Teleperformance has opened a new delivery centre with a seating capacity for more than 2,500 professionals at Mandaluyong City in the Philippines. The company entered the Indian market in 1996 with the opening of its first BPO unit in Gurgaon, now set up its second BPO unit in Indore, Madhya Pradesh, India employing more than 500 people.	

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