The number of new outsourcing contracts awarded was down significantly for Q3 2008, according to TPI’s quarterly Index. And, while the third quarter is usually the weakest for new contract signings, the number of ITO contracts awarded fell dramatically compared to the first two quarters.

The index, which reflects commercial outsourcing contracts valued greater than US$25million, also indicated a quarter-on-quarter decline in total contract value (TCV) and annualised contract value (ACV) for the first two quarters of the year.

Q3 also only saw one mega deal (contracts with TCV greater than $1 billion) signing, there was also a dearth of new mega relationships (contracts in which the ACV is $100 million or greater).

However, in spite of softness in the third quarter of this year, the 2008 year-to-date numbers and values of outsourcing contract awards are exceeding metrics of 2007. Compared with last year at this point, the number of contracts awarded has risen almost 5 percent and TCV has grown nearly 19 percent.

“What we are seeing in the third quarter and year-to-date metrics represents the results of outsourcing initiatives begun in more stable times – compared to the anxiety of recent weeks,” stated Brian Smith, Partner and Managing Director, Financial Services Operations, TPI North America. “The continued softness of those numbers reflects early recessionary indicators seen in the beginning of the year. But the uncertainty and unrest of today’s global economic climate has yet to fully affect the outsourcing industry that serves the Financial Services sector.”

In the third quarter, 128 outsourcing contracts valued at $14.4 billion in TCV and $2.8 billion in ACV were signed in the broader market. Compared to the second quarter of 2008, the number of contracts dropped 22 percent. The TCV and ACV both dropped 50 percent quarter-on-quarter. While third quarters are typically the weakest quarter of a year, the third quarter of 2008 was lower than historical average by almost 20 percent.