The EMEA outsourcing market is in sharp decline, according to research house ISG, which found that contract values spiralled during the first three months of the year.
The annual contract value (ACV) of commercial outsourcing contracts in Q1 fell by 20 per cent across EMEA to €3bn, which ISG claims is a result of enterprises opting to instead put their budgets towards preparing for GDPR ahead of the 25 May deadline.
The steep decline stems from a 40 per cent drop in ACV for traditional outsourcing contracts, despite just a three per cent drop in the number of contracts signed.
The UK saw the steepest declines, according to ISG, suffering a 60 per cent drop spurred on by the collapse of Carillion and other major UK outsourcers.
"There is a degree of uncertainty in the European market that continues to depress demand for outsourcing," said ISG's EMEA president Steve Hall.
"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. 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."
Our sister publication CRN recently reported that outsourcers BT Global Services and Capita have both suffered of late, with the former revealing a nine per cent revenue decline in its Q3, while the latter's share price has fallen by more than 80 per cent since 2015.
Meanwhile, the DACH market suffered its third consecutive quarter of ACV decline, according to ISG, as contract values fell to €438m - its lower quarterly total since early 2014.
Yet ISG claims the market did see a bright spot in the shape of as-a-service outsourcing, which grew by 40 per cent to €1.4bn, representing 46 per cent of the total market.
Infrastructure as-a-service and software as-a-service enjoyed 48 per cent and 13 per cent growth year on year in EMEA, the research house claims.
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