Southern Europe embraces outsourcing

IDC’s analysis of 1999’s top 100 deals reveals southern countries in Western Europe are showing a sharp increase in IT outsourcing.

According to John Ferrier, IDC’s European outsourcing analyst, “Southern Europe’s traditional reluctance toward outsourcing is finally beginning to thaw. Many more major deals were signed in countries such as France, Italy, and Spain compared to the years before. This is a clear indication that companies in these countries are starting to see IT outsourcing as a viable option to face pan-European business pressures such as industry globalisation, e-commerce pressures, and the introduction of the euro.”

The IT skills shortage, the e-business revolution, and the introduction of the euro are having a powerful impact on the IT outsourcing market.

The top 100 deals of 1999 shed light on the impact of these factors. “User companies, for example, are opting for shorter and more flexible contracts,” Ferrier said.

“Markets and technologies are changing so fast that it is no longer realistic to sign contracts of 10 years or more.” Interestingly, this does not mean contracts are becoming smaller in dollar value. “In contrast,” Ferrier added, “our analysis shows more large deals are being signed. In 1999, 44 percent of the top 100 deals had a contract value of $100m or more compared to 33 percent in 1998.

“With the current pace of change in industries such as telecoms and finance, we don’t foresee a slowdown in large outsourcing deal winnings.”

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