Workleaf

Earlier in January this year, TPI, the Outsourcing Research & Advisory firm release its usual quarterly report on the health, numbers and trends observed in the outsourcing contracts that were seen during the later part of 2006. This report observed that there was a significant decline in the Total Contract Value (TCV) in some of the bigger outsourcing deals seen in the observed period. Although it rang some alarm bells in the industry, things stayed calm when observers later found that the service providers have been reporting a reduction in TCV because buyers were trying to do it themselves – DIY Outsourcing! (More on that in a different post).

We’ve been seeing reports of mid-market organizations testing waters with DIY Outsourcing as well. Now, assuming that the credit market situation actually results in a financially stressed IT department, we should be seeing organizations changing tactics on their DIY strategy. Although the whole notion of outsourcing will not go on the back-burner (due to the obvious cost benefits), we may be seeing these deals flowing back into the service providers hands. Thus, we may see an increase in the TCV number in the next couple of quarters.

But are outsourcing service providers, especially the offshore strategists, ready to handle a sudden (even if temporary) increase in deal numbers and sizes?