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Tech & Sourcing @ Morgan Lewis


It sure looks like outsourcing negotiation teams have been busy based on a recently released KPMG deal analysis report that provides details about the information technology and business process outsourcing (IT-BPO) contracts signed during 2013, 2014, and 2015.

Of the three years covered by the report, 2015 had the largest total contract value ($159.1 billion) but the smallest number of total deals signed (891). Information technology outsourcing (ITO) deals (as opposed to BPO deals and bundled IT-BPO deals) accounted for a majority of the total IT-BPO deal activity in 2015, both in terms of contract value ($136.2 billion) and number of contracts (721). In fact, of these three types of deals, ITO deals were the only type that increased in terms of total deal value from 2014, growing by 57% (as opposed to 37% and 19% decreases for BPO and bundled deals, respectively).

In 2015, North and South America contributed slightly greater than 50% of the total deals but more than 61% of the total deal value. The United States accounted for the largest total deal value ($89.7 billion) and number of deals (356). Mexico had the second-largest total deal value ($2.4 billion), followed in order by Brazil ($2.3 billion), Canada ($1.6 billion), and Peru ($986 million). Government and defense dominated IT-BPO deals in the Americas in 2013, 2014, and 2015, combining to contribute 90% of the total deal value for the region in 2015.

Unlike in the Americas, telecom and banking were the leading sectors by number of deals in Europe, the Middle East, and Africa (EMEA). Government deals have steeply declined since 2013, decreasing by 30% between 2014 and 2015 alone. European countries dominated the EMEA region, with the United Kingdom contributing the highest deal value in 2015 ($12 billion), followed by Sweden ($8 billion), Germany ($6.2 billion), Norway ($4.5 billion), and Switzerland ($2.7 billion).

In the Asia-Pacific region, telecom and government contributed a large majority of the total deal value (70%). India provided $6.2 billion of the Asia-Pacific’s total deal value, with China ($4.1 billion), Australia ($3.1 billion), Hong Kong ($661 million), and Russia ($416M) rounding out the region’s top five.

Looking forward, the KPMG report predicts that BPO markets will experience a greater negative effect from the growth of cognitive computing and robotics automation than their ITO counterpart and that the EMEA region will sustain growth vis-à-vis the Americas, continuing to chip away at the Americas’ dominance in the outsourcing industry.