Q2 Outsourcing Market Activity Led by Banking, BPO Services and North American Buyers

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  • BPO market activity increased by 15 percent and 33 percent in transaction volumes and ACV, respectively. IT outsourcing (ITO) registered a decline in ACV by 22 percent.
  • The BFSI vertical saw a 41 percent increase in transactions. Most contracts were signed in the banking sub-vertical; volume was double over the previous quarter.
  • The manufacturing, distribution and retail (MDR) vertical witnessed decreased activity, but increases were found in healthcare, technology and telecommunications sectors.
  • A healthy captive market witnessed a fourth consecutive quarter of robust growth with 38 new announcements and no divestments, signaling the captive model remains an important component of sourcing portfolios.
  • Offshore activity saw 32 delivery centers established in the second quarter, the majority in Asia, followed by Eastern Europe and Latin America.
  • China moved into the category of "mature location," an elite group previously comprised of only India and the Philippines.
  • Consolidated revenues increased across offshore-centric suppliers whereas traditional global suppliers saw revenues drop during the quarter. Operating margins dropped for both classes of suppliers.
  • Mergers and acquisitions activity increased, with 12 acquisitions compared to nine in the first quarter, as well as 61 alliances, compared to 52 in the previous quarter.