Firms favoured smaller outsourcing deals last year

29 January 2009

29 January 2009 | Jake Kanter

The outsourcing market was dominated by smaller deals in 2008 as businesses looked to make quicker savings, according to research by sourcing advisory firm TPI.

The fourth quarter outsourcing index found so-called "small transactions" - those under ?800 million (£749 million) - were more popular than larger agreements.

There was also a "sudden pull back" in mega deals, with only three big contracts, worth a total of ?5.2 billion (£4.7 billion), signed in the second half of last year, compared with the ?13.6 billion (£12.7 billion) in the first half.

Duncan Aitchison, partner and president at TPI EMEA, told www. supplymanagement.com that outsourcing single functions such as HR or IT had become popular as companies wanted to reduce operating costs faster during the economic downturn.

"Smaller contracts can be processed quickly in response to new tactics. Businesses can get some swift return and benefits," he said. "The trend is leaning towards separate contracts for different functions, rather than one big contract for all functions. Companies are doing it in small chunks."

SMjan2009

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