EMEA outsourcing sector slumps to six-year low

Aitchison: the outsourcing market in Europe has struggled so far this year

Tough economic conditions have dragged the EMEA outsourcing sector to its worst quarter since 2003.

That is according to sourcing advisory firm TPI, which tracks commercial outsourcing contracts worth €20m or more.

During the third quarter, just 68 outsourcing transactions were signed in EMEA, with a total contract value (TCV) of €5.2bn. That is a four per cent drop on Q2, a 12 per cent slide on Q3 2008 and is the lowest level for six years.

EMEA TCV for the year to date stands at €18bn, 45 per cent down on an annual comparison and the lowest through three quarters since 2002.

The EMEA slump came despite a record performance for the outsourcing industry globally. Some 139 transactions were signed worldwide with a TCV of €19.7bn. That is the highest third-quarter total on record and an increase of 21 per cent sequentially and 40 percent year over year.

TPI said the global market was bolstered by a spate of mega-deals between telecoms carriers and telecoms service providers. However, EMEA has not benefited from this trend, with the number of mega-deals worth over €800m in the region falling by two-thirds for the year to date.

TPI EMEA president Duncan Aitchison, said: “The outsourcing market in Europe has struggled so far this year with challenging economic conditions and it did not benefit from the telco-to-telco activity that lifted the industry globally.

“However, we are cautiously optimistic about the next six to nine months for the Region based on significant activity in the industry’s pipeline, particularly in the ITO arena, with much of it involving large-scale relationships.”