A look at AP first-half outsourcing results

Just as I did last year, with the first half of the year complete and the market results now available, it's worth considering how things have gone in the Asia-Pacific region. The headlines as reported by TPI are:

• Global outsourcing market up significantly compared to first half-2007


• Global new scope up significantly compared to first half-2007


• Asia-Pacific deals up 9 percent, but deal value down about 45 percent compared to first half-2007

Remember that these comments relate to where the buyers of services are located.

This represents some interesting results that need some further consideration. All regions (the Americas, Asia-Pacific and EMEA) showed growth in the number of contracts--something that reaffirms the expanding use of outsourcing. However, the value of those deals was essentially flat in the Americas, down in the Asia-Pacific region, and up in EMEA (Europe, the Middle East and Africa).

If we look at the Asia-Pacific region in more detail, what we see is that there have been fewer large deals in the first half of 2008 relative to 2007, and that every major country in the region is currently behind pace compared to 2007.

Historically, outsourcing has been a widely-used management tool in times of economic strength and economic weakness, whereas in times of economic uncertainty, the outsourcing market has been more subdued. If we step back and think about the Asia-Pacific region at a macro level, there have been a number of questions over the last six to nine months regarding whether the financial challenges in the United States will be exported to the region-- essentially we've been in an uncertain market.

As the sentiment has shifted that the Asia-Pacific region will have to react to a period of some economic weakness, the question is then, will the second half of 2008 see a spurt of deals that results in the full-year figures reaching the 2006 or 2007 levels?

Certainly the suppliers of services will be looking for that.

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2009

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• Thanks for a great 2008

Michael Rehkopf

Michael has more than 20 years of experience in operations, strategy and sourcing covering all major parts of the globe. He has also worked for Australian, Canadian, German and Japanese companies in both business process outsourcing and IT outsourcing.
Michael's industry experience includes the financial services, manufacturing, telecommunications and travel sectors. He leverages this diverse industry experience and his university background in accounting, IT and his Master of Dispute Resolution, to assist clients in the development of business strategies and the implementation of sourcing strategies. These include the associated evaluation, negotiation and organizational change.
Michael is currently a partner at TPI, the world's oldest and largest sourcing advisory firm. Prior to joining TPI, Michael held leadership positions with Siemens Business Services, OpenPlus International, Mitsubishi Electric and Netron.