Outsourcing market: BFSI bucks trend

BANGALORE, INDIA: Even as the first quarter of 2009 witnessed the global outsourcing market plummeting 7 per cent in terms of transaction volume compared with Q4 2008, the banking and financial services (BSFI) sector picked up to register a 30 per cent growth in transactions, fuelled especially by increased activity in Europe.

According to the latest quarterly 'Market Vista: Q1 2009' report on global outsourcing and offshoring activity by the Everest Research Institute, the same period saw global annual contract value (ACV) plummeting 16 per cent from US$3.55 billion to $2.97 billion.

Meanwhile, BPO activity dropped 15 per cent in transaction volumes. “Our analysis reveals that aggregate US$ revenues across the Market Vista Index of suppliers continued its decline and dropped by 2.2 per cent in Q1 2009, falling in step with the 2.5 per cent decline in previous quarter. Revenues of offshore-centric suppliers registered a 2.3 per cent decline, while those of traditional global suppliers declined by 2.2 per cent,” Nikhil Rajpal, Principal, Everest Group, elaborated.

It was found that the North American outsourcing market clocked a 15 per cent decrease in transaction volume during the first quarter this year compared to the previous quarter.

Though Europe recorded a fall in transaction volumes, its ACV was higher than Q4, mainly aided by some large deals. With the BFSI segment doing well, it was found Asia continued to dominate offshore delivery. Activity included 20 new announcements in Q1, compared to 22 in each of the previous two quarters.

A trend noted was that there was a preference for tier-II cities with new centers arising in locations such as Iloilo City and Bacolod in Philippines, and Gdansk, Lublin and Poznan in Poland. The study also warned of potential near-term risk issues arising in Mexico, El Salvador, Poland and Thailand.