2013 got off to a slow start for the UK IT and business process outsourcing sector, with a 30% drop in total contract value in the first three months of 2013 as the number of new contracts fell and renegotiations dominated activity.
The total value of contracts worth over $5.2m signed in the UK during the quarter was $762m.
The EMEA region as a whole recorded a total contract value of $1.9bn, 20% less than the same period last year. This compared with $3bn in the first quarter of 2010, $2.7bn in 2011 and $2.4bn last year. IT outsourcing accounted for $1.4bn of the total and business process outsourcing (BPO) $500m.
There were 105 contracts awarded in EMEA, 15% less than the same period in 2012 and 17% lower than the previous quarter.
In its outsourcing index, research group ISG said one of the reasons for the disappointing sales was the fact that the proportion of contracts that were renegotiations rose to about 50%, with new contracts down significantly.
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However, ISG expects the rest of the year to improve. “Following a solid 2012 performance, the European outsourcing market is still in a state of flux,” said John Keppel, president of ISG North Europe.
“While on the surface these figures might seem worrying, our pipeline analysis indicates a more bullish performance in the second half of the year.”
Globally the total value of contracts was $3.9bn in the first quarter of 213, compared to $5.4bn 12 months earlier.
Top 10 global IT and BPO suppliers, first quarter 2013