The UK public sector now seals more large outsourcing deals than anywhere else except the US, according to a US market analysis firm.
Information Services Group (ISG) Research said its EMEA TPI Index for 2012 shows that total government deals with an annual contract value (ACV) of at least €4m (£3.4m) in the UK increased 16 per cent in value terms to €4.4bn -- making it the second-largest outsourcing market in the world.
The UK is the largest total market in value terms outside the US, ISG said in its press announcement.
"Government entities in Great Britain awarded 148 contracts in 2012. That number has increased 47 per cent since 2010," the analyst wrote.
ISG puts a positive spin on this figure, arguing that the increase, which includes BPO as well as IT outsourcing, reflects a recognition by the UK government of the strengths of outsourcing.
Luke Mansell, director of ISG, was quoted as saying that the UK public sector had "recognised that best-of-breed providers offer specialist knowledge that can derive real value from outsourced services, value that was not possible with the single-provider mega-deals of the past."
"As a result of this trend toward multi-sourcing, service integration and management is on the rise to ensure contracts deliver value and services are delivered seamlessly," claimed Mansell.
The UK public sector accounted for 55 per cent of total UK ACV, and the UK accounted for 80 per cent of all the public sector contracting in EMEA, said ISG.
According to the EMEA TPI Index charts, the UK's success was partly due to the large size of deals awarded and to the seeds of recovery sprouting in the financial services sector. The top 15 firms were all global giants, including the likes of IBM, Atos Origin, Mahindra Satyam and Tata.
Across EMEA as a whole, ACV was down 29 per cent year on year in 2012, and IT outsourcing as a subset of that was down 48 per cent year on year, it said.
ISG's Mansell said: "Despite intense downward pressures on public expenditure in most European countries, it appears that so far only the UK is using outsourcing as a key response to austerity measures."
ISG, however, remains "cautiously optimistic" for 2013 and is predicting three to four per cent growth in the market in annual revenue terms – although it warns that "contract push-out and lingering fiscal uncertainties" could make for a softer first half.
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