• The total contract value of outsourcing agreements signed during the first half of 2011 dropped roughly 18 percent, driven down by Americas (down 50%)

• The Total Contract Values is lowest reported for second quarter in the past decade

• The total number of outsourcing contracts signed, however, was virtually unchanged-- down 1 percent compared to last year.

The trend shows that the number and value of large contracts and mega deals are on a decline.

The dominance of smaller deals is due in part to companies' reluctance to make the larger investments required for bigger contracts. The lack of big bang outsourcing contracts is also a sign of outsourcing saturation. The penetration of vendors into the largest of the Global 2000 organizations in each industry group is high. Hence, the scope for new large IT transactions coming to market is lower.

Growth is more likely to come from mid-market IT and business process outsourcing, which will produce smaller transaction values. Also there is a growth in restructing of existing contracts. 

Smaller deals also point to outsourcing customers' continued preference for multi-sourcing arrangements over single-sourced deals. Companies like the many-partnered model because it allows them to access specific skills and can provide some internal market competition for services.

In multi-sourced model organizations can effectively run a competitive bid process for certain projects to ensure they are getting some elements of the external market competition, rather than limited choice.

While internal competition for new projects can benefit outsourcing customers, they're increasingly asking their cadre of IT suppliers to cooperate as well. Providers understand this and are increasingly effective in working together for their clients

Maintaining control and oversight of delivery and ensuring that the business users are getting what they need, whilst the value is extracted from the original transaction, can present a real conflict. However, managing the multi-sourced environment continues to be a challenge for some customers.

The mature organizations were taming their tactical issues and focusing on the more strategic aspects of managing the relationship. While the lesser organizations are struggling to cope up with basic vendor management functions such as contract and invoice management.