OUTSOURCING DEMAND GROWTH, DEAL SCOPE AND CONTRACT VALUE FLAT; OVERALL MARKET GROWTH REMAINED POSITIVE, ACCORDING TO EQUATERRA’S 4Q05 PULSE SURVEYS

NEW YORK (January 19, 2006) —EquaTerra, a multi-national outsourcing and insourcing advisory firm, today announced the results of its 4Q05 “Outsourcing Pulse Surveys.”  These quarterly surveys are conducted by Equation, EquaTerra’s benchmarking, research and executive network service line, among EquaTerra advisors and a wide variety of leading Information Technology Outsourcing (ITO) and Business Process Outsourcing (BPO) service providers to reveal in-the-field insights into sector trends and projections.  EquaTerra’s Outsourcing Pulse Surveys focus on outsourcing trends in HR, IT, call center/customer care/CRM, finance/accounting/administration, and procurement processes.

A webcast analyzing the results of EquaTerra’s 4Q05 Outsourcing Pulse Surveys – covering ITO and BPO activity during October through December 2005 – will be conducted on Wednesday, January 25 at 1pm eastern time.  To register for the webcast, please contact:  allison.norman@equaterra.com.  Reports detailing the survey findings will also be available on January 25 by sending an e-mail to:  research@equaterra.com.

Said Stan Lepeak, Managing Director of Equation, “An analysis of our 4Q05 results shows that market demand growth for BPO/ITO services remains flat in comparison with previous quarters.  This is in part due to buyer demand that is tempered from more robust levels earlier in 2005 and in 2004.  A second reason, however, is constraints in service provider capacity, particularly within the BPO market.  Many leading BPO service providers often lack enough “A-team” resources for successful deal pursuit, engagement, transition and delivery.  This hampers buyer’s abilities to source services from preferred providers.  As providers increase capacity in 2006, deal flow will benefit.  ITO, however, suffers more weakness in demand, especially for “mega-deals”, than service provider supply constraint.”

Other findings from the 4Q05 Outsourcing Pulse Surveys include:

• HRO remained the leading market segment, followed by FAO and ITO
• Multishoring/offshoring remains strong, though growth is generally flat quarter to quarter
• Deal pricing stabilized and became more favorable to service providers
• Impact of regulatory compliance continued to wane
• Leading industries for demand were energy/utilities, automotive and banking/financial services

The surveys cover a variety of other topics including outsourcing sales cycles, demand breakdown by process and sub-process, horizontal and vertical industry trends, and other critical measurements. 

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