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Sarah Beyrath
+44 (0) 845 838 7500

HOUSTON and LONDON (January 18, 2008) — Despite fear of a recession in the U.S., jitters on virtually all major stock exchanges worldwide and widespread cut-backs in corporate spending, EquaTerra’s 4Q07 Pulse surveys revealed that outsourcing demand is rebounding, with continued strong growth in EMEA and a substantial increase in North America. In fact, 70 percent of EquaTerra advisors cited increased demand levels for Information Technology (IT) and business process outsourcing in 4Q07, with demand up 19 percent over 3Q07, up 24 percent over 4Q06, and at the highest level recorded since 2Q05. Further, 59 percent of service providers cited new deal pipeline growth in 4Q07, and 57 percent expect demand to increase in 1Q08.

The “Why’s” behind the outsourcing demand increase

EquaTerra attributes the increase in outsourcing demand levels to a variety of factors including:

• Weak economic indicators: Although expense reduction isn’t the only driver for outsourcing, many organizations are reemphasizing outsourcing to increase their bottom line

• New functions outsourced: Buyers are focusing on new and growing areas like legal and knowledge process outsourcing, document and electronic records management, industry specific offerings and knowledge intensive services

• Service provider readiness: EquaTerra advisors are seeing some improvements in overall service provider capacity, in part driven by improved pricing and contracting terms

• Smaller, more numerous deals: The outsourcing market continues to evolve with more but smaller deals spread across a greater number of service providers and delivered on a more global basis

Said Stan Lepeak, EquaTerra’s Managing Director of Research, “While the current state of the economy is forcing Western commercial enterprises to cut budgets for capital investments and many types of discretionary business and IT services, the projection for outsourcing investments remains positive and is improving. This highlights the importance of outsourcing as a tool for cost reduction and avoidance, as well as the ongoing broadening of the outsourcing footprint beyond traditional BPO and ITO areas'

'Although the outsourcing market will remain choppy over the next two to three quarters at the individual buyer and service provider level, demand growth will increase at the macro level' he continued 'It is important to note, however, that the outsourcing demand improvements we saw in 4Q07 will for the most part not result in new deal closings until late 2008 and into 2009.”

Little Negative Impact on Workforce

EquaTerra noted that the increase in outsourcing activity does not appear to be having a negative affect on workforces. For example, according to the European Commission, employment growth accelerated to one and a half percent in 2006, representing three million jobs in the European Union, unemployment decreased by one percent form 2004 to 2006 and is set to go down by another one half percent by 2008.

Top 2008 Sourcing Sector Trends

Based on the 4Q07 Pulse Surveys, several EquaTerra research studies and client interaction, following are some anticipated 2008 trends:

• Outsourcing will continue to be recession-proof

• Public sector demand will continue to grow, and shared services and internal transformation in this sector will get stronger

• Recent turmoil in credit markets will selectively slow outsourcing in the financial services sector in the short term but drive more ITO in the long term. Financial services firms will also continue to pursue offshore captives but often within the region rather than in India or China for various regulatory and risk reasons

• Global multi-shore and multi-provider outsourcing will become more the norm than the exception

• Indian service providers will set up more local delivery services centers in the U.S. and EMEA, and will also expand offerings into new areas of ITO and BPO

• A confluence of factors will lead to the expansion of service delivery capabilities beyond India to regions like Central/South America, Central/Eastern Europe and China

• Governance of outsourcing deals will become paramount as buyers seek to maximize value and minimize value leakage

• Capital expenditure avoidance (e.g., enterprise software upgrades, migrations) will become a key driver for increased ITO and BPO, as will the continuing challenges of appropriately skilled talent and workforce shortages

To receive a copy of the report detailing the survey findings, which will be available soon, please send an e-mail to:

About EquaTerra

EquaTerra sourcing advisors help clients achieve sustainable value in their IT and business processes. Our advisors average more than 20 years of industry experience and have supported over 2000 transformation and outsourcing projects across more than 60 countries. Supporting clients throughout the Americas, Europe, Middle East, Africa and Asia Pacific, we have deep functional knowledge in Finance and Accounting, HR, IT, Procurement and other critical business processes. EquaTerra helps clients achieve significant cost savings and process improvement with internal transformation, shared services and outsourcing solutions.

This press release was distributed by ResponseSource Press Release Wire on behalf of Equaterra Europe Ltd in the following categories: Business & Finance, for more information visit