UK outsourcing market stuttered in 2018 despite recovery signs - report

Traditional outsourcing in the UK bombed by over a quarter last year

The brief signs of a recovery in the UK's outsourcing market were not enough to stop an overall decline in 2018, according to ISG.

The traditional outsourcing market in the UK fell 27 per cent to €2.5bn (£2.2bn) last year, despite a five per cent increase in the number of contracts agreed.

ISG attributed the decline to Brexit, claiming that before the EU referendum the UK market averaged three €800m quarters of traditional outsourcing every year.

However it has only reached this level in one quarter since the referendum (Q1 2017).

Since the referendum in 2016, it has experienced a quarter of this level just once.

Q3 last year had shown signs of promise, seeing the value of deals jump 40 per cent.

In EMEA as a whole, traditional outsourcing fell nine per cent year on year to €12.9bn, while as-a-service outsourcing rocketed 48 per cent to hit €4.9bn.

Steve Hall, president of ISG, said: "Despite ongoing political and economic uncertainty in Europe and resulting business caution, companies are making significant investment in digital technologies to improve their ability to compete and to engage with their customers.

"This is a clear testament that the tailwinds of digital transformation are stronger than the headwinds of political and economic issues."

Traditional outsourcing also fell in DACH (down five per cent) and France (down three per cent) last year.

ISG said that the traditional outsourcing market in Germany saw a 19 per cent drop in the number of contracts signed.

However, the Nordics market thrived, with the value of contracts shooting up 20 per cent to €1.1bn - while contracts were up 14 per cent.