UK outsourcing declines as Nordics surge

The number of new outsourcing contracts signed by UK businesses declined in the third quarter, according to the latest research from sourcing consultancy TPI.

The number of new outsourcing contracts signed by UK businesses declined in the third quarter, according to the latest research from sourcing consultancy TPI.

The research looked at private sector outsourcing deals worth more than €20m in Europe, the Middle East and Africa.

For the region as a whole, the total value of contracts signed in the third quarter was €5bn. This is 8% lower than the previous quarter and 10% lower than the same period a year ago. Globally the total value of contracts was €11.3bn in the quarter, which was 20% lower than the previous quarter and the same period a year ago.

Spending on outsourcing increased in the Nordics and Netherlands as a result of several large scale restructuring deals signed in the first nine months of the year. However, in the UK and Germany the total value of contracts awarded was only half that of the same period last year.

Duncan Aitchinson, head of Europe at TPI, expects to see more outsourcing activity in the UK next year. "Theoretically the recession is over, but there is still nervousness and reticence to do big deals," he said.

Robert Morgan, director at consultancy Burnt-Oak Partners, said the company is seeing demand for sourcing advice from the Benelux and Nordic businesses far outstripping the UK.

He said the Nordic economies are growing much faster than the UK, at 6.5% in some cases, and businesses are moving into new areas.

He said businesses there have a different attitude to outsourcing contracts. "Scandinavian companies will not go to competitive tender if the business case is right from a single supplier," he said.

Morgan said there is a lot a lot of activity in Benelux countries because there are a lot of contracts up for renewal and multi-sourcing is being introduced for the first time by many businesses.

In the UK, businesses have been waiting to see how the coalition government works out and the details of the spending review.

Morgan said deals will be slower to be signed in the UK because businesses are looking at new ways of working, such as joint ventures, and they are asking suppliers to go the extra mile.

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