A total of £6.65bn was spent on IT and business process outsourcing (BPO) in the UK last year, with IT outsourcing accounting for £3.44bn of that, according to research.
The study, carried out by NelsonHall for BPO supplier Arvato, also found 55.5% of the deals signed in 2014 were new, compared with 33% in 2013.
It also revealed a modest increase in onshore delivery, with 66% of last year’s deals delivered fully onshore. The remainder had an offshore element, with 8% delivered exclusively from offshore locations.
John Willmott, CEO of NelsonHall, said outsourcing is getting more sophisticated as organisations attempt to become digital.
“The use of both cloud and DevOps became more prevalent during 2014, and IT infrastructure contracts were increasingly being based around private and hybrid cloud transformation, reflecting the ongoing demand from businesses seeking to digitise their operations, he said.
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Willmott said pricing and contracts are changing because businesses cannot afford the large transformations they need.
“Commercially, we saw an emerging trend for transaction and usage-based pricing, supplemented by gain-share agreements based on supplier investment, which is largely being driven by organisations that have a strong need for cost reductions but lack the means to finance transformations themselves,” he said.
Private businesses accounted for 63% of the spending. The financial services industry spent £1.1bn, and there was 187% growth in spending by energy and utilities companies, which was the fastest growing and reached £1.07bn.
Local government saw a 15% increase in average contract value to £30.3m.