Based on total contract value (TCV), the second quarter of the year was down 13.5% quarter-on-quarter but it did show a 20% (quarter-on-quarter) improvement in terms of volume, according to data released by sourcing data and advisory firm TPI.

The 2Q10 Global TPI Index, which measures commercial outsourcing contracts valued at $25m or more, recorded TCV of $18.1bn in Q2 2010, down about 13% both sequentially and year-on-year.

Results for H1 2010 indicate that despite sluggishness, clients continuing to look to outsource to improve operations and enable innovations such as cloud computing.

During the first half of 2010, the global market TCV of $38.9bn remained flat with a year ago following the unprecedented surge in contract restructurings during the first quarter. In the second quarter, restructurings accounted for 20% of TCV, in line with historical trends.

The market in the second quarter exhibited particular softness in Europe, the Middle East and Africa (EMEA), Asia Pacific and IT outsourcing (ITO).

In EMEA, however, quarterly TCV fell both sequentially and year-on-year, 21% and 14%, respectively. Meanwhile, in Asia Pacific, TCV increased 5% sequentially in the second quarter but dropped 73% year-on-year. While the Americas saw second-quarter TCV decline 9% over the first quarter of 2010 but increase 21% over the second quarter of 2009.

By scope, ITO TCV during the second quarter fell nearly 30% sequentially and 23% year-on-year. First-half ITO TCV of $29bn, fueled by the large contract restructurings of the first quarter more than by second-quarter performance, rose 5% over the year before.

The quarterly TCV of contracts for business process outsourcing (BPO) rose 60% over the first quarter of 2010, which was one of the worst on record in this segment, and 20% over the second quarter of 2009. But overall BPO activity remained weak by historical standards, with the greatest growth in contracts valued at between $10 million and $25 million.

Finally, by industry, the Global TPI Index found declining activity in financial services, manufacturing and telecom & media, even in the more robust Americas region.

These three sectors are as critical as ever to the outsourcing market, and their relative sluggishness restrained overall market growth in both the second quarter and the first half of the year.

In contrast, the travel, transportation and hospitality industry saw impressive gains for the second straight quarter, and the retail sector, with four successive halves of growth off a small base, remained another industry to watch, as retailers continue to experience top-line revenue pressure and pursue cost reductions from sourcing.