The take up of
IT outsourcing services by businesses has slowed over the past
three months, reaching its lowest level for six years.
Research from outsourcing specialist TPI shows that the value of
outsourcing contracts signed across Europe, the Middle East and
Africa fell from £11.6bn to £3.5bn between the second and third
quarters. The number of contracts dropped from 75 to 56.
But the number of
outsourcing deals is expected to surge before the end of the
year, pushing total value of contracts up beyond 2007 levels, TPI
predicts.
Duncan Aitchison, president at TPI EMEA, said, "It seems likely
that the sharp decline in outsourcing in the past quarter is a
temporary pause following the most intensive nine months of
outsourcing activity in the region's history."
"We are aware of several large transactions already underway in
Europe and therefore expect to see a stronger performance in the
fourth quarter."
Phil Morris, European managing director at sourcing consultancy
Equaterra, said the
imminent recession has forced CIOs to put outsourcing plans on
hold until they have a clearer picture of the future. "The
summer has been softer from what we have seen, but it is picking
up."
He said recession is changing the rationale for outsourcing. "In
the UK there is an expectation of recession, and outsourcing is
being seen as a way of cutting costs."
Robert Morgan, director at consultancy Hamilton Bailey, said
because of the market uncertainty CIOs must ensure they choose the
right suppliers to work with. "They must understand the culture of
the supplier, whether it is an innovator and where they fit into
the supplier's ecosystem of customers."
He said this will ensure the customer gets flexibility, which is
important while the future is uncertain.