UK manufacturers more than double outsourcing spend

UK manufacturers spent £130m on outsourcing services in the first half of this year, with a big rise in functions being outsourced for the first time

UK manufacturers spent £130m on outsourcing services in the first half of this year, with a big rise in functions being outsourced for the first time.

According to figures from NelsonHall and BPO firm Arvato, 132% more was spend on outsourcing in the six months compared with the first half of 2013. Two-thirds (66%) of all contracts in the manufacturing sector were first-time agreements.

Manufacturers that have not traditionally outsourced functions are trying to refocus their internal resources to expand their core businesses.

The British Chamber of Commerce revealed recently that manufacturers reported a 42% rise in domestic sales in the second quarter of 2014 – the biggest increase since the survey began in 1989.

Debra Maxwell, managing director of Arvato UK, said: “While not seen as a traditional market for business process and IT outsourcing, manufacturers, under increasing growth pressure, are turning to outsourcers to help support non-core functions, allowing them to focus on expansion strategies and product innovation. The flexibility and efficiency savings that outsourcing provides is the ideal tonic for their growing pains.”

The research also showed how local government outsourcing has matured, with 75% of all agreements being renewals, extensions or supplier changes.

Overall, the value of outsourcing deals in the second quarter totalled £734m from 34 contracts. The private sector accounted for most deals, with the telecoms and media, financial services and energy and utilities sectors accounting for 70% of the total spend (£513m).

Recent figures from ISG showed that UK businesses spent €1.4bn on IT and BPO services in the first half of 2014. This was 6% up on the first half of last year. Echoing the Arvato findings, ISG revealed that the growth in total contract value outpaced the number of deals, with just 83 contracts signed, compared with 92 in the equivalent period last year.

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