Outlook for global business process outsourcing (BPO) and offshoring industry will remain cautiously optimistic in medium-to-long term despite decline in transactions, independent advisory and research firm Everest Group said on Thursday.

“While there are some signs to show that global outsourcing and offshoring market is beginning to slow down, it is still early to comment on how the overall global market scenario will shape up,” VP, global sourcing, Everest Group, Amneet Singh said. He said the company has to see few more quarters to determine if this is a momentary blip or beginning of downturn trend.

According to its third quarter report on global outsourcing and offshoring industry, Market Vista, market witnessed 472 outsourcing deals compared with 508 and 516 transactions in the Q1 and Q2 of this year, respectively. However, while there was a dip in transaction deals by nine percent on a quarter-on-quarter (Q-on-Q basis), Q3 global transaction volumes reached around $2.7 billion in annual contract value (ACV), up six per cent over previous quarter, primarily due to signing of a few large-size contracts.

Compared to Q2 2011, market saw a decrease in BPO transactions by 12 percent and information technology outsourcing (ITO) transactions by seven percent.

“This has been the first significant decline in the number of transactions for first time in four quarters,” Singh said. He said banking financial services and insurance (BFSI) sector continued to lead transaction activity, while manufacturing, distribution and retail (MDR) segment also saw meaningful activity.

North America and Europe witnessed marginal reduction in transactions, while the UK and rest of world saw significant decline of 22 per cent and 15 per cent, respectively, he said. On captive’s part, Singh said there was increase of 20 new centres in Q3. Captives are also offshore wherein a company retains work and close operational tie-ups within parent company.

ronendrasingh@mydigitalfc.com