UK outsourcing market bounces back with biggest quarter ever

€1.4bn worth of traditional outsourcing deals inked in Q1, according to ISG

The UK outsourcing market has rebounded from Brexit uncertainty to register its biggest quarter on record, according to market watcher Information Services Group (ISG).

ISG measures commercial and public sector outsourcing contracts in EMEA with an annual contract value (ACV) of €4m or more.

Traditional sourcing deals with an ACV of €1.4bn were awarded in the UK in Q1, according to ISG's index, the highest amount ever.

This follows three weak quarters in 2016 as UK businesses shut their wallets in the wake of the Brexit vote.

Q1 ACV in the UK was boosted by four ‘mega relationships', ISG added.

The UK is comfortably the largest market for traditional outsourcing in Europe, with a trailing 12-month ACV of €3.18bn, compared with €2.65bn for Germany, €0.76bn for the Nordics and just €0.5bn for France.

Across Europe, the commercial sourcing market - comprising both traditional sourcing and as-a-service - rose 19 per cent year on year to €3.5bn in Q1, according to ISG.

Traditional sourcing deals made up €2.5bn of the total, with the faster-growing as-a-service side chipping in a record €1bn.

Public sector outsourcing deals, however, have been hit by macro-economic events like Brexit and the upcoming French election, ISG added. In France, just €70m of traditional sourcing contracts were inked in Q1, the weakest performance for five years.

John Keppel, partner and president of ISG, said: "There is a lot to be positive about, with the EMEA market showing strength in both traditional sourcing and as-a-service contracting. After a slow start, as-a-service continues to go from strength to strength. As a result of this and some robust activity in traditional sourcing, we expect high single-digit gains in the EMEA market for the rest of 2017."

For EMEA, ISG pinpointed Accenture, Atos, BT, Capgemini, Cognizant, Fujitsu, HPE, IBM, Infosys, TCS and T-Systems as the leading outfits by ACV. On the as-a-service side, AWS, IBM, Google and Microsoft were singled out as key players.