Companies flocked to IT outsourcing vendors as the recession unfolded last year and industry watchers expect more of the same as companies seek to slash fixed costs and deliver services with smaller staffs.
"The pipeline for the leading outsourcers is strengthening as they get a lot of distress calls from new prospects. We haven't tracked a slowdown in the market yet," says Ben Pring, research vice president at Gartner.
The market research firm reported that the average contract size among the top 20 outsourcing deals inked in 2008 reached $998 million and the average length exceeded six years. Companies such as AT&T, EDS and Tata Consulting Service contracted multi-year, megadeals in 2008, while IBM in late December signed multi-year outsourcing contracts with Whirlpool and Sara Lee, the values of which were not disclosed. Overall IBM reported it had signed services contracts totaling $17.2 billion, including 24 greater than $100 million, in the fourth quarter.
