ISG to publish report on global public sector IT outsourcing


ISG to publish report on global public sector IT outsourcing

Karl Flinders

IT outsourcing market intelligence company ISG will soon release its first global public sector research report, reflecting the growing importance of the sector to the global outsourcing industry.

As governments set tough cost-cutting targets, public sector organisations are turning to IT outsourcing and BPO service providers to take on services at a lower cost.

Which of the following processes are outsourced by your organisation?

John Keppel, president Northern Europe at ISG, said that for the first time the research, previously known as the TPI Index, will feature a report focused specifically on global public sector spending. This is due to the growth of this segment since 2011. “For the first time we are going to do a full year report on global public sector outsourcing. It has become more important to the market and to us.”

According to ISG research, the annual value of IT outsourcing and BPO in the EMEA public sector from the beginning of 2011 to now has been 30% higher than the commercial sector. In fact, its figures show that in the 11 quarters since the beginning of 2011 only the second quarter 2011 had commercial annual contract values higher than the public sector. Of €108bn annual contract value since the start of 2011 56% was spent in the public sector.

In terms of global spending on IT outsourcing and BPO, the US public sector accounts for 53% of spending, followed by the UK, which represents 26% of the spend. This compares to continental Europe (6%), Australia and New Zealand (5%) and Canada (3%).

The public sector requires a very different approach from suppliers because public sector organisations differ from businesses in how they buy. For example, ISG said said service delivery reach is more important than shareholder value; geographic scope is local, not global; service integration is more important, because consortium bids are more common; procurement constraint, such as contract size and duration, differ from private sector, and there is a reluctance to offshore work.

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