The average size of IT and business process outsourcing (BPO) services contracts almost halved in the second quarter of 2005, research published today has revealed.
Based on figures from Datamonitor's IT Services Contracts Tracker, the average size of contracts announced by IT and BPO services vendors in the first quarter of 2005 fell to $56m from $106m a year ago. Average deal size has now declined for four consecutive quarters.
Datamonitor tracked a total of 447 deals during the second quarter of 2005, which represented a 7.5 per cent rise over the 416 contracts logged during the year-ago period. The value of deals fell by 43 per cent from $44.1bn to $25bn.
This decline was attributed largely to a fall in the number of mega-deals signed during the quarter. Datamonitor tracked three deals with a value greater than $1bn, two for IBM and one for BT Group, compared to six in the second quarter of 2004.
The number of deals with a value greater than $100m also fell from 70 to 49 over the same period.
Nick Mayes, lead analyst for global computing services at Datamonitor, said: "Clients continue to take a more selective approach to outsourcing which is reducing the number of mega-deals up for grabs.
"Another major trend is the impact that the offshore Indian suppliers is having on the market."
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