NelsonHall, the leading BPO analyst firm, today announced the results ofits "BPO Index" market monitor for the period ending September 2008.NelsonHall's BPO Index shows that, despite the credit crunch and downturnsin Q2, the BPO TCV grew by 28 percent in the past twelve months.

While the second quarter was not as profitable a quarter for BPO contractsignings, there was an overall 13 percent increase in contract signings incommercial and civil government sectors for the first 9 months of 2008.While the number of new BPO contracts has arguably continued to decline,the number of BPO contracts valued at over a $100 million has increased by21 percent in the last 12 months and the average value of the top 20 - 50deals has increased by 34 percent. This has been at least partly driven bysome very large deals in the insurance sector, including the $1Bn contractbetween WNS and Aviva following the $228 million acquisition of Aviva'scaptive unit by WNS Global Services and Capita's estimated $350 millioncontract to deliver Marsh UK's back office administration functions.

The BPO contract value in the "growth economies" grew slightly faster, at31 percent, than the BPO contract value in the "mature economies" whichgrew at 28 percent. However, while BPO is becoming increasingly importantto support domestic activity in the growth markets, it remains a smallportion of overall BPO activity and the growth markets are at this stagepredominantly consulting and systems integration markets rather than BPOmarkets.

The two sectors that usually dominate the contract activity, financialservices and government, have increased their share of contract TCV from 62percent to 72 percent. However, there has been a significant shift in thebalance, with BPO activity in the government sector growing sharply overthe past 12-months and overtaking that in the financial services sector.BPO contract activity has increased dramatically at both the federal andstate levels in the U.S. and continues to grow in local government in theU.K.

BPO activity in the insurance sector has grown strongly in the past 12months, accounting for approximately two-thirds of activity in thefinancial sector, while activity in the banking sector has declined. Thiscan be largely explained by the credit crunch, which has hit the bankingsector hardest and earliest. At the moment, the banking sector needs moredramatic remedies than BPO can provide. However, BPO is likely to be anincreasing part of the solution in the medium-term.

Front-office and middle-office outsourcing areas have strengthenedconsiderably over the past 12-months and they now account for 81 percent ofBPO contract value. Major front-office BPO contracts are also veryprominent, recent examples of contracts include the "USA Contact" contractand a number of major commercial CMS contracts awarded to vendors such asConvergys and TeleTech.

Elsewhere, the telecom sector has been very active in BPO recently andactivity is up in both transportation and healthcare. The manufacturing andretail sectors have recently seen lower levels of BPO activity. Thesesectors, like the banking sector, have some immediate rethinking of theirwider strategies to carry out but, similarly are likely to turn to greateruse of BPO in the medium-term once they have addressed any urgent crises.

NelsonHall's quarterly BPO Index reports are available as part ofNelsonHall's BPO subscription services. For more information aboutaccessing this report and NelsonHall's BPO subject matter experts, pleasecontact the following NelsonHall representative:Paul Connolly at paul.connolly@nelson-hall.com.

About NelsonHall

Founded in 1998, NelsonHall is the leading global independent analyst firmin Business Process Outsourcing (BPO). The company provides buy-side andsell-side organizations with deeper research and analyses in major BPOdisciplines than any other research firm in the world. These includeFinance and Accounting, Human Resources, Procurement, Banking, Insurance,Government and Customer Management Services. The company'ssubscription-based model provides subscribers with robust market analyses,case studies, vendor assessments, contract analyses, market reports andaccess to a content-rich BPO contracts database. The firm covers a widerange of industries, including financial services, government and utilitiessectors, and tracks worldwide and regional BPO activity. For moreinformation on NelsonHall, please visit www.nelson-hall.com.