Gartner: Outsourcing megadeals remain scarce

Further slowdown expected in the first half of next year

Large outsourcing deals signed by businesses increased in number last year, but they remained rare compared to pre-2007 figures.

That is the conclusion of research by Gartner, which found 12 deals of over US$1 billion were signed globally with individual suppliers last year, compared to 10 in 2007. The largest deal signed was $2.5 billion.

While the total value of megadeals was $17.1 billion, a near 50 percent increase on the $12 billion in 2007, this represented a slump on pre-2007 values, Gartner said in its 'Outsourcing contracts annual review'. From 2000 to 2006, the average annual total value was $28 billion.

"With the increasing popularity of selective sourcing and the trend toward greater control of the buyer, we continue to see both the average value of a deal, and the average duration of a deal decline," said Dean Blackmore, senior research analyst at Gartner.

In 2008, Europe, the Middle East and Africa overtook the Americas as the leading geographic region in terms of the volume of deals signed. Some 162 deals were signed in EMEA compared to 158 in the Americas.

Gartner said there was "softness" in large deal signings, but "no catastrophic decline". Nevertheless, it expects to see a greater slowdown in the first half of next year as IT budgets tighten.

Organisations were still outsourcing for cost, efficiency, access to skills, to focus on their core business, innovation, modernisation and business transformation, Gartner said.

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