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By | OUT-LAW.COM 16th February 2015 09:03

Bad news, IT bods: UK's tech outsourcing up 15% last year

OK, mostly call centre folk you can email and tweet to...

IT outsourcing contracts agreed in 2014 totalled £3.44bn in value, with nearly a third of that value accounted for by deals struck in the energy and utilities sector.

Those deals were worth £1.05bn and accounted for most of the 187 per cent year-on-year rise in the sector on £373 million spent on all outsourcing deals in the sector in 2013.

The figures were revealed by BPO provider arvato in its UK Outsourcing Index for 2014 (1-page/715KB PDF). The data was based on information complied by outsourcing analysts NelsonHall.

According to the report, the UK's outsourcing market was worth £6.65bn in 2014, with £3.1bn of contracts agreed business process outsourcing (BPO) deals. Contracts worth £109m were agreed representing a mix of ITO and BPO arrangements.

"The most in-demand ITO services were multi-scope infrastructure management, with £899m of spend, application management, worth a combined £772m and network management contracts totalling £485m," arvato said.

The report revealed that public sector outsourcing contracts agreed in the UK last year had a total value of £2.49bn and that just eight per cent of all outsourcing deals in the public and private sectors signed by UK-based organisations in 2014 "involved work being delivered entirely offshore".

Debra Maxwell, managing director of arvato UK, said: "Outsourcing has mistakenly become synonymous with offshoring, yet our research demonstrates that UK delivery is continuing to play a fundamental role in the industry as customer requirements become more sophisticated."

She added: "Offshoring will always have a role to play in meeting certain business’ needs but the demand for more sophisticated solutions, combined with salary inflation in traditional offshore locations, means UK-based delivery is set to continue to dominate."

The report also highlighted changes in the way that customer relationship management functions are being delivered by organisations. More than 60 per cent of third parties delivering these services now provide "multi-channel" services, up from 40 per cent in 2013.

NelsonHall said: "Whereas relatively recently contact centre outsourcing contracts in the UK were typically for voice only services, in 2014 it was the norm for customer management services contracts to be multi-channel in nature, with email, web chat, and even social media support commonplace. This was true across both the private and public sectors, with the e-government initiative ensuring that all local government customer services contracts announced were widely multi-channel in nature."

In the financial services sector, there was a rise in the number of outsourcing contracts entered into for platform-based services. In 2013, a quarter of all UK outsourcing contracts in the sector were for platform-based services, but this rose to 40 per cent last year, according to the report. New outsourcing deals agreed in the sector in 2014 had a total value of £1.1bn, making it "the most active private sector", it said.

Copyright © 2015, is part of international law firm Pinsent Masons.

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