ISG reports shift in outsourcing to lower value contracts

A report from sourcing advisor, Information Services Group, has reported a decline in the value of contracts during 2013

Information Services Group (ISG), a sourcing advisory company, has reported a decline in the value of outsourcing contracts during 2013, due to buyers opting for more but smaller deals.

The number of outsourcing contracts in the European, Middle East and Africa (EMEA) markets rose during the final quarter of 2013, compared to the same period in 2012, yet the value of these deals fell, ISG said.

ISG reported there were 167 outsourcing contracts awarded in EMEA in the fourth quarter of 2013, a 25% rise year on year.

But the annual contract value fell to €2.16bn, a 20% decrease quarter on quarter.

The total value of contracts in the fourth quarter of 2013 was more than €8bn, which was 6% less than the same period in 2012.

ISG said: "As business focus changes from recessionary cost cutting to strategic advantage, factors such as competitive market conditions, automation and other technology innovations have combined to create a market characterised by good volumes but weaker values."

The UK and Ireland spent the most on outsourcing in 2013, although the average contract value dropped 30%, which was spent on 13% more suppliers than in 2012.

The business process outsourcing market market in EMEA declined sharply following two years of solid growth, according to ISG. It reported the fourth quarter saw 39 contracts valued at €400m awarded in EMEA, down both year on year and quarter on quarter.

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