UK grabs hold of IT outsourcing crown

Figures from analyst Information Services Group show healthy rise in contract values

The UK has been crowned king of the outsourcing market in 2012, according to market watcher Information Services Group (ISG).

It claimed that while the overall outsourcing market across EMEA declined last year, the UK recorded a healthy rise in contract values.

In total the 4Q12 EMEA TPI Index – which covers commercial outsourcing contracts with an annual value of €4m (£3.35m) or more – totalled €2.1bn in Q4, a six per cent drop from Q3 2012, and a significant 29 per cent drop from Q4 2011.

The UK, which is the largest market in Europe, saw average contract value rise 20 per cent in 2012 to €3.7bn. ISG claimed this was aided by a number of large facilities management contracts awarded in the financial services sector. Despite the number of contracts signed declining year on year compared with 2011, contracting activity in the UK appears very stable, ISG revealed.

Contract values for the full year were also subdued across EMEA, with €8.2bn recorded, a 12 per cent decrease from 2011.

The 434 contracts awarded in EMEA in 2012 marked a 21 per cent decrease compared with the record high recorded in the region last year.

John Keppel, president of ISG North Europe, said: “It is important that we consider these contract counts for 2012 within their larger and quite significant historical context. Remarkably, EMEA contract numbers have nearly doubled since 2007. Several factors account for this: more restructurings returning to market, more multi-sourcing and more new contracts coming online from first adopters.”

Looking ahead to Q1 2013, Keppel said the global outsourcing picture was mixed.

“We anticipate a healthy influx of awards in the first quarter, possibly followed by lower levels in the second. The short-term pipeline appears robust and better than ever, according to the service providers we speak to, yet the longer-term view has not yet crystalised," he added.