UK outsourcing perks up depressed EMEA market: ISG Report

EMEA (Europe, Middle East and Africa) map

Information Services Group, an analyst firm, has noted in its report that that the outsourcing in UK market has been tremendous in the EMEA (Europe, Middle East and Africa) zones in the overall outsourcing market for 2012. UK outsourcing had an annual contract value of £3.1 billion in 2012.

This represents a whopping 38 percent share in the entire EMEA outsourcing market. The 4Q12 EMEA TPI Index  report of ISG states that this is a 20 percent rise from 2011. The rise has been caused mainly due to a couple of attractive facilities management contracts that the UK market signed up for in the financial services sector.

Depression of EMEA market

The year 2011 was very lucrative for the EMEA outsourcing market with 2012 proving to be a letdown. It was only the UK outsourcing market which proved to be a solace to the zones. The quarterly report from ISG covers the commercial outsourcing contracts with value over €4m (£3.4m) in a year which has contributed to the €2.1 billion (£1.8bn) EMEA outsourcing market in Q4 of 2012. This value shows a decline of 6 percent from the third quarter of 2012.

The report further states that the contract value in the final quarter of 2012 is lower by 29 percent from the same quarter in 2011. However, it has also been stated that this is not very alarming since the fourth quarter of 2011 was particularly strong and hence the steep difference in the statistics.

The annual contract value for the year 2012 was €8.2 billion (£6.9bn) which is lesser by 12 percent. The number of contracts that had been signed in the EMEA outsourcing market had higher value individually. However, at the count of 434, a decline of 21 percent was observed when compared to 2011.

According to John Keppel, president, ISG North Europe, the increase in the number of contracts has huge significance. The number of outsourcing contracts in EMEA zones has doubled since 2007. He added that several factors are responsible for this development such as increased multi-sourcing, restructurings going back to the market on a larger number as well as the first adopters returning with new contracts online.

BPO becomes prominent in EMEA outsourcing market

BPO has prevailed as the strong point in the EMEA market despite the recession, showing some positive figures. However, contracts in IT outsourcing has taken a huge dip, becoming the lowest in the last five years.

Keppel said that organizations are now looking towards BPO value propositions that can bring about significant business changes in the positive direction. This is in spite of the previous sentiments of companies which looked towards IT outsourcing for cutting costs in constrained business scenarios.

Keppel has mixed predictions regarding the upcoming quarters for EMEA outsourcing market. He predicts that the market will have a healthy and steady influx of awards during the first quarter with second quarter slated to show a slump. He said that service providers are expecting strong short-term influx while long term view is not very apparent at this time.

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