The company on Friday reported that 20 percent of the value of outsourcing deals inked in the first six months of 2005 represented restructured contracts as opposed to entirely new awards.

That figure compares with an average retooling rate of 11 percent over the past decade.

Duncan Aitchison, managing director of TPI's international business, cited a "marked uptick in contract restructuring."

Aitchison termed restructuring a "normal part of the outsourcing lifecycle" as technology evolves and customers' business objectives change over time. But he contended that other factors now lend impetus to the restructuring drive.

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The rise of viable offshore locations, for example, has sparked customers' desire to renegotiate, he said. The prospect of getting tasks done cheaper tends to grab customers' attention.

And then there's customer dissatisfaction. Deloitte Consulting LLP earlier this year found that 70 percent of the customers it interviewed had had significant negative experiences with outsourcing.

Growing customer discernment regarding outsourcing provides another factor. Customers have a more thorough grasp of their own requirements and higher expectations of their vendors. The upshot: Outsourcing providers face increasing pressure to offer a responsive service, according to Aitchison.

And TPI has more news outsourcers should heed: The pace of growth has begun to slow.

TPI said that the global outsourcing market hit peak growth in 1999, when revenue surged 22.3 percent. Setting restructured deals aside, the industry's annualized revenue growth for 2004 was 5.9 percent, TPI found.

TPI projected that the traditional information technology market will grow at a rate of 6.7 percent in 2005, while the BPO (business process outsourcing) segment will expand at an 8.6 percent rate. Over the next three years, TPI forecasts a 4.6 percent compound annual growth rate for IT outsourcing. The less established BPO market is projected to grow at a faster 17.1 percent rate.

Aitchison said the slowing growth rates and contract restructuring point to a maturing market.

A handful of companies control an increasing portion of that maturing market—a concern for smaller providers. Vendors that TPI terms the Big Six—Accenture, Affiliated Computer Services, Computer Sciences Corp., Electronic Data Systems, Hewlett-Packard, and IBM—increased their 2005 (year to date) global market share to 49 percent from 46 percent in 2004.

"The Big Six regained market share, with IBM driving much of that momentum," Aitchison said.

Indeed, IBM has been snagging numerous outsourcing deals of late. In June alone, the company won a $1.6 billion pact with energy concern NiSource Inc., a $300 million contract with European brewer InBev, and a seven-year IT infrastructure management deal with Carlsberg.

What to make of it all? Consolidation is typically a consequence of market maturation. In business process outsourcing, a number of small and middle-tier players have already been snatched up by their larger counterparts. Affiliated Computer Services' recent purchase of LiveBridge Inc. falls into this pattern.

The merger and acquisition route provides one tactic, but partnering with larger firms and niche marketing may offer other outlets for second-tier companies.

Companies off all sizes, however, must answer to a more demanding set of customers—and be prepared to take a seat at the negotiating table.