Source: The Devon Group

NelsonHall BPO Index Indicates BPO TCV on Rise Despite Credit Crunch

Government Sector Sees Increase in BPO Contracts While Banking Industry Sees Decline

BOSTON, MA and LONDON and COLOGNE, FRANCE and PARIS--(Marketwire - October 15, 2008) -

NelsonHall, the leading BPO analyst firm, today announced the results of its "BPO Index" market monitor for the period ending September 2008. NelsonHall's BPO Index shows that, despite the credit crunch and downturns in Q2, the BPO TCV grew by 28 percent in the past twelve months.

While the second quarter was not as profitable a quarter for BPO contract signings, there was an overall 13 percent increase in contract signings in commercial and civil government sectors for the first 9 months of 2008. While the number of new BPO contracts has arguably continued to decline, the number of BPO contracts valued at over a $100 million has increased by 21 percent in the last 12 months and the average value of the top 20 - 50 deals has increased by 34 percent. This has been at least partly driven by some very large deals in the insurance sector, including the $1Bn contract between WNS and Aviva following the $228 million acquisition of Aviva's captive unit by WNS Global Services and Capita's estimated $350 million contract to deliver Marsh UK's back office administration functions.

The BPO contract value in the "growth economies" grew slightly faster, at 31 percent, than the BPO contract value in the "mature economies" which grew at 28 percent. However, while BPO is becoming increasingly important to support domestic activity in the growth markets, it remains a small portion of overall BPO activity and the growth markets are at this stage predominantly consulting and systems integration markets rather than BPO markets.

The two sectors that usually dominate the contract activity, financial services and government, have increased their share of contract TCV from 62 percent to 72 percent. However, there has been a significant shift in the balance, with BPO activity in the government sector growing sharply over the past 12-months and overtaking that in the financial services sector. BPO contract activity has increased dramatically at both the federal and state levels in the U.S. and continues to grow in local government in the U.K.

BPO activity in the insurance sector has grown strongly in the past 12 months, accounting for approximately two-thirds of activity in the financial sector, while activity in the banking sector has declined. This can be largely explained by the credit crunch, which has hit the banking sector hardest and earliest. At the moment, the banking sector needs more dramatic remedies than BPO can provide. However, BPO is likely to be an increasing part of the solution in the medium-term.

Front-office and middle-office outsourcing areas have strengthened considerably over the past 12-months and they now account for 81 percent of BPO contract value. Major front-office BPO contracts are also very prominent, recent examples of contracts include the "USA Contact" contract and a number of major commercial CMS contracts awarded to vendors such as Convergys and TeleTech.

Elsewhere, the telecom sector has been very active in BPO recently and activity is up in both transportation and healthcare. The manufacturing and retail sectors have recently seen lower levels of BPO activity. These sectors, like the banking sector, have some immediate rethinking of their wider strategies to carry out but, similarly are likely to turn to greater use of BPO in the medium-term once they have addressed any urgent crises.

NelsonHall's quarterly BPO Index reports are available as part of NelsonHall's BPO subscription services. For more information about accessing this report and NelsonHall's BPO subject matter experts, please contact the following NelsonHall representative: Paul Connolly at

About NelsonHall

Founded in 1998, NelsonHall is the leading global independent analyst firm in Business Process Outsourcing (BPO). The company provides buy-side and sell-side organizations with deeper research and analyses in major BPO disciplines than any other research firm in the world. These include Finance and Accounting, Human Resources, Procurement, Banking, Insurance, Government and Customer Management Services. The company's subscription-based model provides subscribers with robust market analyses, case studies, vendor assessments, contract analyses, market reports and access to a content-rich BPO contracts database. The firm covers a wide range of industries, including financial services, government and utilities sectors, and tracks worldwide and regional BPO activity. For more information on NelsonHall, please visit