The Channel logo

News

By | Kat Hall 24th April 2015 14:38

Value of European outsourcing deals plummets

Folk don't want to do mega deals these days, it seems

The number of mega outsourcing deals shrank by 25 per cent in Europe for the first quarter of 2015, with just 128 contracts, valued at €1.9 billion (£1.4 billion), according to outsourcing analysts Information Services Group (ISG).

David Howie, a partner at ISG, said the figures reflect a trend toward smaller deals, although "activity is still strong in the market," he added.

The company defines big deals as having an annual contract value of more than €4m (£3m).

The UK had its weakest first-quarter since 2010 clocking up a mere €600 million (£430 million), compared with more than €1 billion in the first quarter of 2014, said the report.

"Historical trends suggest that the upcoming general election may be affecting activity," said Howie.

However, under a separate analysis of business process outsourcing (BPO) deals, the UK public sector had the largest number of deals awarded in the world at €1.9 billion (£1.36 billion).

The financial services sector clocked up the largest amount of outsourcing deals, with the total value increasing by 120 per cent to €1 billion (£700 million).

John Keppel, partner at ISG, added: “The [European] market has had a slow start to 2015. Whilst there were some positive results, specifically in [Germany, Austria and Switzerland], and in the financial services sector, these were not enough to counterbalance declines in other, established markets such as the UK, France and the Nordics."

Despite an overall decline in the value of contracts, outsourcers still bagged a number of big wins for the quarter. For example, HP’s 10-year, multi-billion dollar global win with Deutsche Bank in February.

However, last year IBM outpaced HP in the number of deals it hoovered up, according to TechMarketView. These included a $1 billion (£644 million) deal with German airline Lufthansa, a win with global comms company WPP for $1.25 billion (£800 million), and undisclosed deals thought to be worth more than £500 million with media Thomson Reuters and Dutch bank ABN AMRO. ®

comment icon Read 2 comments on this article or post a comment alert Send corrections

Opinion

Baby looks taken aback/shocked/affronted. Photo by Shutterstock

Kat Hall

Plans for 2 million FTTP connections in next four years 'not enough'
Microsoft CEO Satya Nadella
Stranded_ships

Chris Mellor

Thousands of layoffs announced as spinning rust enters its death spiral

Features

STRASBOURG, JUNE 29, 2016: The seat of the European Parliament. by Marco Aprile for shutterstock. EDITORIAL USE ONLY
Plan b, image via Shutterstock
EU workers, new markets: post-Brexit pressure on May & Co
Tough question, pic via Shutterstock
Honest mistake with your licensing? Audit police look at it on a 'case by case basis'