Finance sector opts for fewer, larger outsourcing deals

The financial services sector initiated fewer outsourcing contracts in the last three months of 2008, but those contracts were worth more money.

The number of outsourcing transactions in the financial services sector during the fourth quarter of last year was down by 33% compared to the previous quarter, according to a report published this week by outsourcing market watcher the Everest Research Institute.

But that does not mean that companies in the sector are outsourcing less. The combined value of finance sector outsourcing contracts signed in the quarter grew 10% consecutively to $3.6 billion.

Indeed, the dip in the number of transactions might be explained by the fact that some companies in the sector such as investment bank Lehman Brothers went bust, while others such as Merrill Lynch were acquired.

IT outsourcing made up the lion’s share of the sector’s outsourcing footprint; IT contracts constituted 55% of the contract value, and 69% of the deals.

The most dramatic change between the third and fourth quarters of the year was a sharp increase in the value of combined IT and business process outsourcing contracts. The number of deals only grew from 28 to 31, but their combined value grew from $220 million to $1 billion.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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