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European IT services spending down as businesses focus on GDPR compliance

European organisations are reducing their spending on IT services and are redirecting resources towards becoming compliant with the EU General Data Protection Regulation

The first three months of 2018 saw spending on IT services by European organisations plummet as they focus attention and resources on preparing for the European Union’s (EU’s) latest data protection regulation.

According to research from ISG, which measures IT and business process outsourcing contracts worth €4m or more, organisations are spending on being compliant with the General Data Protection Regulation (GDPR), which becomes law in the EU in May.

The amount of money being spent on outsourcing in Europe has plunged in the first quarter of 2018 as companies battle GDPR.

Steve Hall, president at ISG EMEA, said: “The focus on preparations for the sweeping GDPR data-privacy regulation and the impact this will have on business relationships is front of mind for many organisations and has led to a shift in priorities.”

He added that the collapse of Carillion has created caution among businesses when buying services. “The recent demise of Carillion and the financial uncertainty of some high-profile outsourcing companies has been extensively reported and has added a new degree of caution in the market,” he said.

In Europe, the Middle East and Africa (EMEA), there was a steep fall in traditional sourcing, which dropped 40% in the first quarter of this year compared with the first quarter of 2017. But as-a-service contracts soared rose 40% over last year, reaching €1.4bn in the quarter, after high demand for infrastructure as a service (IaaS).

In the UK, the value of traditional outsourcing rose 3% in the first quarter compared with the previous quarter, but was down more than 60% compared with the same period in 2017. Globally, the overall IT outsourcing market reached a record high of €9.8bn in the first quarter of 2018.

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