Global public sector outsourcing outpaced the private sector by 46 per cent in Q3 this year, with the UK playing a major role, according to figures from Information Services Group (ISG).
The market watcher claimed the combined annual contract value (ACVs) of global public sector outsourcing agreements reached €7.4bn (£6.2bn) in Q3, compared with €4.6bn in the private sector.
According to its findings, the public sector outsourcing market now represents 56 per cent of global outsourcing ACVs.
Interestingly, the UK is one of the top three spenders in public sector outsourcing, along with the US and Australia, with the biggest driver business process outsourcing (BPO), with an emphasis on solutions for pensions and social security, taxation and other e-governance initiatives.
The analyst calculated that 122 public sector outsourcing contracts have been awarded in the UK, valued at €5.1bn in ACV.
John Keppel, president of ISG North Europe, said: “Government organisations are not that different from large corporate firms: both want to save money and operate efficiently.
“Despite pressure to control spending, governments cannot simply put infrastructure investments aside. Instead they are relying increasingly on outsourcing to balance the need for efficient, localised services with the need to rein in costs.”
In the rest of Europe, public sector outsourcing is much less common, the report found. The most active regions are Benelux, the Nordics and DACH, the total of which were significantly less than the UK.
To date Benelux has awarded 21 public sector sourcing deals with a combined value of €310m, while DACH and the Nordics both recorded 17 public sector deals, valued at €336m and €131m respectively. Despite the gap with the UK, ISG noted that the number of public sector outsourcing contracts has increased across all European markets in the past two years.
Keppel added: “While overall activity remains low in many European markets, public sector organisations are starting to consider the use of outsourcing in their wider sourcing strategies. This points to the significant untapped potential in many European regions, where the impact of wider public sector adoption could be a huge boost to the industry.”
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