57 Percent Growth in Business Process Outsourcing Contract Value in 2007 to Date

Boston — October 22, 2007 — The business process outsourcing market is prospering with year-on-year total contract value (TCV) growth of 26 percent, and 57 percent growth during the first nine months of 2007, according to the latest "BPO Index" released by BPO analyst firm NelsonHall.

Much of this growth is coming from a resurgence of interest in BPO in North America, NelsonHall reports in its BPO Index market monitor for the third quarter.

Levels of BPO contract activity have been particularly strong in the North American government and financial services sectors over the past twelve months, but in addition there has also been steady growth in BPO TCV across a wide range of other sectors in North America, including manufacturing, retail, energy and utilities, and transportation, according to the analyst firm.

NelsonHall also found that that there has been a turnaround in the average size of the leading BPO contracts during 2007. Average BPO contract size had fallen globally during 2005 and 2006. However, the average size of the top 20 and top 50 BPO contracts has now returned to its 2004 levels.

According to NelsonHall, this is due to the resurgence in major industry-specific contracts, particularly in state and local government, insurance and, occasionally, utilities, together with a stream of large multi-process human resources outsourcing contracts arising predominantly out of North America.

NelsonHall reported that BPO now accounts for 42 percent of total global outsourcing contract value.

A relatively new trend arising in Q3 2007, which is also supporting the increase in average contract size, is the emergence of a stream of relatively large finance and accounting (F&A) outsourcing contracts, with TCVs typically around $200 million.

These contracts, which include the contracts between Infosys and Philips, Microsoft and Accenture, and BT and Xansa, are not confined to North America and are also emerging strongly in Europe. Separate F&A outsourcing contracts are also beginning to emerge for transactional accounting services and for higher value services such as month-end closing, reporting and forecasting, as demonstrated by BT's contract with Accenture.

Customer management services vendors are also continuing to move into F&A outsourcing through acquisition, for example, Teleperformance's acquisition of Alliance One and Transcom's acquisition of IS Inkasso Service Group, though these organizations are focusing on collections and accounts receivables management where they can bring their customer care skills to bear.

Q3 also saw new developments in the move towards utility services in the banking sector, with EDS launching a payment card processing utility in Australia and Tata Consultancy Services launching an outsourced reconciliation service with Deutsche Bank as the initial client.

More information on NelsonHall's quarterly BPO Index reports are available at the firm's Web site.

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