UK leads globe in big multi-sourcing deals

2013 saw efficiency maximised through service integration and management

Outsourcing deals involving a variety of specialist services providers are becoming more popular – and the UK is leading the globe.

That's according to the Q4 2013 figures just out from research consultancy Information Services Group (ISG) on global, commercial outsourcing contracts of $5m ($3m) or more.

John Keppel, partner and president at ISG North Europe, said the phenomenon of increased deal fragmentation has been around for some time, but different markets exhibit varying appetites for the practice.

"More mature markets, such as the US, have previously embraced multi-sourcing but realised it can be difficult to manage the numerous supplier relationships and have swung back towards a model with fewer providers," Keppel said.

"However, the UK is in a honeymoon phase and employing more sophisticated management models, such as the Service Integration and Management (SIAM) method to maximise efficiency."

ISG's latest research shows that just six per cent of UK contracts were single source, while a further 22 per cent followed the more traditional "Single Source 80" model where 80 per cent of the outsourced function is with one provider, 20 per cent with a variety.

In the UK, 44 per cent of all outsourced functions this quarter were divided among five, or more, services providers. That compared to just 12 per cent of those in the US, according to ISG.

IT outsourcing, as a subset of the analysis, was one of the strongest-performing sectors, expanding eight per cent in the quarter year on year with an average total contract value of $3.7bn.

Total global average contract value was $4.6bn for the quarter – down 12 per cent year on year.

EMEA as a whole saw a trend towards more outsourcing contracts with smaller contract values. The number of outsourcing deals signed in the region, as assessed by ISG, rose 18 per cent during 2013, but collective value of the deals slid six per cent on 2012.