FSN: UK extends its lead in European outsourcing

UK extends its lead in European outsourcing

24th October 2005
Forrester Research's Quarterly European Outsourcing Deals Survey for Q2 2005 has identified 67 outsourcing deals, involving 22 vendors, that exceeded Forrester's threshold of €10 million in contract value.

Forrester reports that, firms in the UK and Germany closed most of the €5 billion in outsourcing deals tracked, in particular in the financial and public sectors. Infrastructure outsourcing shrunk slightly, and buyers outsourced more than two categories of IT services per deal on average, although the mean deal size shrunk. BT Global Services headed the vendor table for deal value, bagging €2.2 billion for a single deal with the UK Ministry of Defence (MoD).

Infrastructure outsourcing declined for the first time in seven quarters, whilst Telecom and network outsourcing grew by leaps and bounds. Almost a third of this quarter's deals involved telecom or network outsourcing services; this was 18% more than a year ago, and almost identical to Q1 2005. Siemens Business Services (SBS) and Gerling signed one of the largest contracts in this space, valued at €300 million; according to this deal, SBS will take over, run, and maintain the insurer's entire IT infrastructure — including PCs, laptops, telephones, and networks.

Q2 2005 saw the most BPO deals ever reported in Forrester's survey. More than a quarter of the deals were BPO agreements — almost twice the proportion found last year. Boots and Xchanging were the largest of these, worth €592 million, involving outsourcing administrative tasks to manage spending in areas such as corporate travel, facilities management, and invoice processing.

Looking at the number of contracts completed in the two most mature outsourcing industries — government and public sector and financial services and insurance — the public sector outpaced the financial services industry for the first time ever. High tech and utilities, two sectors with a patchy outsourcing record, both surpassed the results of a year ago.

In terms of country differences, the UK extended its lead with UK firms representing 39% of the total deals in the second quarter of last year, boosting that market's share by six percentage points this year.

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