Europe bucks global outsourcing trend

Link: Government outsourcing bill to reach £16bn

To date this year, 22 mega deals have been signed in Europe, compared with 12 contracts in 2002. Globally, 54 large outsourcing deals have been signed, worth a total of €37.2bn, compared with 51 contracts worth €33.8bn by this time in 2002.

Mega deals signed at the back end of last year included JP Morgan’s €5bn deal, Deutsche Bank’s €2.6bn deal and a ? ¬1.1bn deal with retailer Boots, all with IBM.

According to research by Technology Partners International (TPI), which advises on outsourcing deals, European contracts signed so far in 2003 represent almost 41% of all contracts in the €200m plus band.

Despite increasing popularity of Business Process Outsourcing (BPO) projects and offshore contracts, the number of contracts worth at least €50m in Europe showed a less dramatic 5% increase – although average total contract values surged 39% to €442m.

Duncan Aitchison, managing director of TPI’s international business, told VNU News Centre: ‘Larger contracts are more prevalent in Europe than ever before. Globally there’s been a 26% decrease in the value of BPO deals, but in Europe the average deal is worth €300m compared to €193m last year.

‘My instinct tells me it’s due to a maturing of the outsourcing market. Larger organisations are taking bolder steps. We’re also seeing increasing use of sourcing relationship not just for cost reduction but also to drive change in the way things are done,’ Aitchison added.

The immaturity of the BPO market is leading to the emergence of new players, he said.

TPI’s analysis also shows a shift away from call centre outsourcing to core processes such as human resourcing and accounting. At the same time, 44% of transactions that TPI is engaged in include some offshore element.

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