Asia Pacific Emerges as Top IT Outsourcing Destination

The Asia-Pacific region continues to rise as one of the top IT outsourcing destinations in the world. According to the Asia-Pacific TPI Index, the region’s 2012 annual contract value (ACV) hit $3.1 billion.

This is 55% more than the 2011 figures. The increase, according to the index from The Information Services Group (ISG) – which tracks contracts in commercial outsourcing that are worth $5 million and above – is due to impressive performances by business process outsourcing (BPO) firms and emerging markets as well as the contracts awarded in new segments, which comprised 88 % of the total contracts awarded in 2012.

ISG Asia-Pacific partner and president Sid Pai said in an article published in Business Standard, “Asia-Pacific’s robust 2012 performance contrasted sharply with the wider global picture, in which Europe struggled and the Americas remained flat. In contrast to peaks and troughs recorded in other regions, the number of contract awards here followed a pattern of consistent growth.”

The region, while a relatively smaller market compared to Europe and the U.S., is experiencing a more sustained growth rate and the ISG executive noted that the region’s “salient characteristics” include having two large emerging economies, India and China.

“These are expected to contribute strongly to demand. [The region] also has excellent BPO growth in addition to ITO (information technology outsourcing) growth,” Pai added.

Outsourcing contracts awarded in the region in 2012 increased by 6 % year-on-year. Also according to the index, Asia Pacific is the only region which showed an increase in contract or ACV count last year.

The 2012 ACV figure for the BPO segment – $1.4-billion – is 133 % higher than the previous year’s figure. The increase is driven largely by contracts for industry-specific BPO firms and for contact centers. The index further indicated that the contracts awarded to BPO firms in the Asia-Pacific have doubled since 2007.