The imminent general election has put a dampener on UK firms' desire to outsource, according to ISG, which said the market suffered its weakest Q1 in four years.
Deals by value and volume across EMEA were down by 25 per cent, according to the analyst, which measures deals with an annual contract value (ACV) of €4m (£2.9m) or more.
It said the "sharp" decline was due partly to a strong comparable quarter a year ago, but also slower activity in France, the Nordics and the UK – the UK driven by the upcoming general election.
In the UK, ACV hit only €600m compared with a year ago when value smashed the €1bn barrier. The general election – and the six-week pre-election purdah period building up to it – prompted fear and confusion for some in public sector-focused channel firms, and ISG said this election year is no different to any other.
"Historical trends suggest that the upcoming general election may be affecting activity; the 2010 lull coincided with the last UK election period, and similar patterns have been observed in the US during that country's election cycle," ISG said.
But it is not all bad news, the analyst added.
"On the other hand, the UK public sector was the world's largest business process outsourcing (BPO) market in the first quarter, with awards totalling €1.9bn.
"Public sector bodies have embraced BPO to support government agencies with taxation, pensions and e-governance initiatives, a trend that has been particularly evident in the UK in recent quarters."
Security firm set to become part of acquisitive Shearwater Group
Distributor merges three northern sites into one new hub in Warrington
Activist investor puts forward five director candidates as turmoil continues at security giant
Nima Green asks what is driving public cloud uptake in Germany