Is IT outsourcing stagnant?

This article reports on a decline in the total value of global commercial outsourcing contracts in the United States. The analysts observe that contrary to the expectation and hype the IT outsourcing is not growing, in stead it is declining. According to TPI Corp., a sourcing advisory company, the total value of global commercial outsourcing contracts declined by about 4 percent to $75 billion from $78 billion in 2004. These figures are based on TPI's year-end market observations in its TPI Index, a quarterly report on the state of the global outsourcing industry. Decline in the value of mega-deals is considered a big reason behind this drop. According to Peter Allen, TPI partner and managing director there are three main factors behind this decline. First, contracts are being crafted more narrowly. Second, customers are leaving capital equipment purchases out of their outsourcing deals, which decreases contract values. Third, more work is being done offshore in lower-cost country. It was also noted by TPI that 2005 was a big year for contract restructuring.