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Story URL: http://services.silicon.com/offshoring/0,3800004877,39155563,00.htm

$100bn outsourcing bonanza could see Indian breakthrough
Can offshorers break the dominance of Accenture, EDS and co?

By Steve Ranger

Published: Thursday 12 January 2006

Almost $100bn in outsourcing contracts will be up for grabs in the next two years - and big players including Accenture, EDS and IBM could feel their grip on the market weakened by more competition from offshore companies.

The 'Big Six' of outsourcing - Accenture, ACS, CSC, EDS, HP and IBM - are the incumbent service providers on 72 per cent of the contract value to be renewed over the next two years, and could see their "dominance challenged", according to outsourcing advisory firm TPI.

TPI said 325 contracts are due for renewal during 2006 and 2007 - one in five of all outsourcing deals. IBM and EDS alone have a combined total of $50bn in contracts coming up for renewal.

Although incumbent providers usually win contract renewals, increasing competition means providers cannot rest on their laurels, said TPI managing director Duncan Aitchison.

He said: "Client retention will increasingly depend on an incumbent's ability to offer a competitive proposition. This could mean significant changes in price and scope from the original contract."

Around half of all new contracts include some sort of offshore element.

There is also a trend towards smaller deals which could challenge the dominance of the big players - and help Indian outsourcers.

Of the 293 contracts signed in 2005, nearly three-quarters were small- to medium-sized contracts. And whilst Indian providers rarely win deals over $200m, last year they were invited to pitch for 30 per cent of contracts below this threshold and won 70 per cent of them.

Aitchison said that as both big outsourcing companies and Indian outsourcers grow their operations around the world "the intense competition in this market looks set to continue".