UK business outsourcing spending plummets


UK business outsourcing spending plummets

Kathleen Hall

Commercial outsourcing spend in the UK plummeted during the first half of 2010, according to research.

A total of €3bn was spent on private sector outsourcing contracts with a deal value of more than €20m, down from €5.2bn in the first six months of 2009, according to a report from business support provider TPI. The figures include all forms of outsourcing, not just for IT.

The public sector accounted for 75% of the UK's €12bn total outsourcing spend during the period, said TPI.

However, there are concerns that government cuts will significantly affect the outsourcing market. Last year the public sector spent £2.3bn on outsourced and managed IT services alone.

The total figure for commercial outsourcing contracts in Europe, the Middle East and Africa (EMEA) fell to €13.3bn in the first six months of the year, down 6% from the first half of 2009. Global spending remained flat compared with same period last year, at around €32bn.

TPI president Duncan Aitchison said, "The market appears to be following a first-in, first-out pattern, with the US now showing some signs of sustained recovery while Europe has yet to see an upturn. Historically, the UK has lagged the US by 18 to 24 months. We will watch with interest to see if signs of improvement in EMEA occur more quickly."

Between 2005 and 2009, the public sector accounted for 57% of outsourcing contracts in the UK compared to the commercial sector's 43% share.

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