OUTSOURCING MARKET REMAINS STRONG, BUT CONTINUES TO FLATTEN; SCOPE AND CONTRACT VALUE HAVE DECLINED, ACCORDING TO EQUATERRA’S 1Q06 PULSE SURVEYS

NEW YORK (April 19, 2006) —EquaTerra, a multi-national outsourcing and insourcing advisory firm, today announced the results of its 1Q06 “Outsourcing Pulse Surveys.”  These quarterly surveys are conducted 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 Pulse Surveys focus on outsourcing trends in HR, IT, finance and accounting, procurement and call center/customer care/CRM processes.

       A webcast analyzing the results of EquaTerra’s 1Q06 Outsourcing Pulse Surveys – covering ITO and BPO activity during January through March 2006 – will be conducted on Thursday, April 20 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 April 20 by sending an e-mail to:  research@equaterra.com.

                  Said Stan Lepeak, EquaTerra’s Managing Director of Research, “While levels of both ITO and BPO remain strong, there is an ongoing slowing in market growth rates.  This is a function of a slowing in demand, a constraint in supply, and a more thorough sourcing process being employed by buyer organizations.  Scope and contract value levels are also increasing at a slower rate.” 

Key findings from the 1Q06 Outsourcing Pulse Surveys include:

• HRO remained the leading market segment (cited by 29 percent of EquaTerra Advisors), followed by ITO (23 percent) and FAO (19 percent).  Service providers polled also cited HRO as the strongest process area
• Citations of increased contract value by EquaTerra Advisors were at their lowest levels in over a year.  Advisors that focused primarily on ITO were the least likely to cite an increase in contract value
• EquaTerra Advisors found the sales cycle to be lengthening, while in contrast, service providers cited steadysales cycles in comparison to previous quarters
• Service provider sales pursuit and delivery capacity is improving slightly, though is still tight.  Advisors that focused primarily on BPO were the most likely to indicate capacity was tightening/constrained
• Both EquaTerra Advisors and service providersindicated scope levels were flat
• Leading industries for overall demand were energy/utilities, CPG/retail and pharmaceutical/biotech

The surveys cover a variety of other topics including challenges to deal consummation, the impact of compliance, levels of offshore outsourcing and demand breakdown by process and sub-process, horizontal and vertical industry trends, and other critical measurements. 

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