Europe is still the bright spot in worldwide outsourcing market

The outsourcing market in EMEA is off to the best start to the year since 2010 according to the latest figures from analysts.
Written by Colin Barker, Contributor

While the market for outsourcing often fluctuates with changing fortunes and fashions, the market in EMEA continues to stay healthy according to the latest research from analyst Information Services Group (ISG).

According to ISG's calculations, the EMEA outsourcing market has had its best start to the year since 2010.

For the first quarter of 2014, the outsourcing market in EMEA was worth €2.4bn, up 10 percent over the previous quarter and 29 percent over the first quarter of 2013. This represented some 165 new or renewed contracts in the first quarter of this year, an increase of 21 percent on the same quarter last year but only a one percent increase over the previous quarter.

Growth in the outsourcing market around the world was more variable with  €1.5bn in contracts being awarded in America, a fall of 16 percent over the first quarter of 2013 but an increase of 32 percent on the previous quarter (the fourth quarter of 2013).

The majority of contracts awarded in the first quarter were newly specified and accounted for 76 percent of all contract value in the region which was an increase of 48 percent year-on-year and the highest quarterly value in four years, according to ISG.

The UK continues to be a bright spot

In the UK 59 contracts were recorded which was the highest number awarded in a quarter in the last three years. Annual UK contract value totalled just over €1bn – up 33 percent quarter-on-quarter and 66 percent year-on-year.

According to David Howie, a partner at ISG, the outsourcing business is currently robust in Europe and, especially, the UK. "In the last quarter (Q1 2014) we have seen the number and size of the outsourcing deals being significantly higher than the average over the last eight quarters," he said. "In the UK we are seeing on average of more than $800m being signed per quarter."

Howie said that his company is seeing similar growth in the UK and the US and believes that the growth in outsourcing in those two countries will continue to outstrip growth in Germany and the rest of Europe.

"It is partly culture," Howie explained. "Economically, the UK now has much more in common with the US than it has with the rest of Europe. In places like Germany, they have more control over their economy while here and in the US we are more open."

Germany saw a slight dip in contract values for the quarter, with around €330m in annual contract value recorded, down slightly quarter-on-quarter and year-on-year. However, contract counts increased by 21 percent quarter-on-quarter and rose 52 percent compared with a weak first quarter of 2013.

France, which was driven by mega-awards, experienced an impressive jump in market values for the quarter. The €630 million in contracts awarded placed France as the second biggest market in EMEA this quarter. France saw a growth of almost 300 percent quarter-on-quarter as it marked its best first quarter ever by both contract value and number of awards. You can find the detailed figures here.

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