Outsourcing megadeals soared in 2002

In outsourcing, it seems that size matters, at least judging by the fact that companies signed more outsourcing megadeals in 2002 than in 2001.

There were at least 14 outsourcing megadeals worth a combined total of $28.4 billion in 2002, up from 9 such deals worth a combined total of $15.1 billion in 2002, according to Dataquest. Already in 2003 there are at least four pending megadeals worth a combined total of $15.3 billion, Dataquest said.

Dataquest defines an outsourcing megadeal as one whose value over the life of the contract exceeds $1 billion, principal analyst Bruce Caldwell said Thursday.

Criticism has been levied recently at this type of outsourcing megadeal, for being difficult to manage and putting a strain on both the client and the provider, but judging by the results of the study it seems that chief information officers aren’t heeding the warnings to steer clear of these engagements.

IBM snatched half of the outsourcing megadeals last year, and shared another one with Keane. Meanwhile, Electronic Data Systems won two, and Computer Sciences got one.

Over the past 12 years, IBM leads with at least 32 megadeals, followed by EDS, which had 21 and CSC with 15.