IT outsourcing increases at fastest rate since 2010

The number and value of IT outsourcing deals in Europe in the first three months of 2014 grew at the fastest rate for four years

The number and value of IT and BPO outsourcing contracts signed in Europe in the first three months of 2014 grew at the fastest rate for four years, according to the latest figures from market watcher ISG.

Three-quarters of the deals signed involved new scope.

Contracts signed in the quarter year period were worth €2.4bn, which was 29% higher than the same period a year ago. The number of contracts signed was 165, a 21% increase.

 IT outsourcing accounted for 127 deals in the quarter worth €2bn of total value, an 18% increase. BPO value was about €370m, which was lower than the same period the year before.

Five large outsourcing deals, worth over €80m each, were signed in the quarter. Over 50% of the global outsourcing value was in the EMEA region.

In the UK, 59 contracts were recorded, worth €1bn. This represented a 66% increase in value and the highest number of contracts in a single quarter for three years.

John Keppel, president of ISG North Europe, said activity remains high and the return of large relationship awards boosted the market.

Despite the return of large deals, Keppel re-iterated ISG’s previous report, that stated that customers are moving to smaller contracts. 

“Although these larger contracts have a strong role to play in the market, the smaller deal size brackets will continue to grow more sharply as enterprises opt for greater flexibility and more specialised services from a greater number of providers,” he said. 

“Multi-sourcing, increasing competition among providers and lower technology costs will continue to be the factors that drive the market for the foreseeable future.”

Keppel said global IT and BPO outsourcing is expected to grow 15% in the first half of the year and a “high single digit” figure for the full year.

 

 

 

 

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