Feeds

Europe goes mad over outsourcing

Accounts for half of global deals

Beginner's guide to SSL certificates

Demand for outsourcing in Europe has increased dramatically in the first half of 2007, compared with the same period last year, according to the latest Quarterly Index from labour sourcing advisers TPI.

The total value of new outsourcing contracts in the €40m plus bracket, where most significant outsourcing activity occurs, is up 78 per cent on 2006.

This €12.3bn of new business represents a significant recovery from the relatively soft outsourcing market experienced in Europe last year, and is a 23 per cent increase on an average €10bn of new contracts added in each of the previous five years.

So impressive is Europe's record on new deals this year that it accounts for over half (54 per cent) of new outsourcing contracts signed globally, against 32 per cent last year and a five-year average of 38 per cent.

Duncan Aitchison, managing director of TPI, said: "continental European countries have been relatively slow to adopt outsourcing, which makes it a market with huge growth potential. Five years ago, the region accounted for only twelve per cent of global outsourcing deal activity, and only Germany, France and the Netherlands managed to achieve above a one per cent share."

"Now, Continental Europe has nearly trebled its share to 30 per cent, with Belgium, Denmark, Norway, Finland, Switzerland, and Italy each representing over one per cent of the global market," he said.

Europe's buoyancy has been driven in particular by a concentration of "mega deals" in the region. These deals, each worth in excess of €800,000m, represent 44 per cent of the new business to hit the European outsourcing market so far in 2007.

Moreover, of €7.8bn in mega deals awarded globally this year, over two thirds (68 per cent) have been in Europe, which compares with an average of 39 per cent over the last five years and gives Europe its greatest ever share of this top end of the outsourcing market.

Four of the five mega deals awarded in Europe this year have been for network outsourcing, as indeed have been five of the eight mega deals struck worldwide, with growth in this area propelling telecoms companies up the hierarchy of global outsourcing providers. Ranked by their share of contract awards worth over €40m (including restructurings), BT now takes the number two position worldwide, up from number 13 last year; Alcatel-Lucent and Ericsson take the number five and six spots, up from 15 and 11 respectively; and AT&T enters the top 15 for the first time at number 10.

The global "big six" (Accenture, ACS, CSC, EDS, HP and IBM), who continue to dominate the global outsourcing market in terms of existing contracts, have won only 10 per cent of mega deals by value so far this year, compared with an average of 63 per cent over the last four years.

The Big Five Europe (Atos Origin, BT, Capgemini, Siemens and T-Systems), who dominate ongoing outsourcing service provision in Europe, have won 27 per cent of mega deals, compared with only 16 per cent over the last five years, reflecting Europe's increasing importance at the top end of the global outsourcing market.

In the broader market of deals over €40m, the "big six" maintain more of a dominance, at 41 per cent, albeit they have witnessed a 22 per cent decline in their share this year, compared with the last four years. The "big five" have a 13 per cent share of this same market, down 12 per cent on their four-year average.

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Internet Security Threat Report 2014

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Google Glassholes are UNDATEABLE – HP exec
You need an emotional connection, says touchy-feely MD... We can do that
Just don't blame Bono! Apple iTunes music sales PLUMMET
Cupertino revenue hit by cheapo downloads, says report
US court SHUTS DOWN 'scammers posing as Microsoft, Facebook support staff'
Netizens allegedly duped into paying for bogus tech advice
Feds seek potential 'second Snowden' gov doc leaker – report
Hang on, Ed wasn't here when we compiled THIS document
Verizon bankrolls tech news site, bans tech's biggest stories
No agenda here. Just don't ever mention Net neutrality or spying, ok?
NATO declares WAR on Google Glass, mounts attack alongside MPAA
Yes, the National Association of Theater Owners is quite upset
prev story

Whitepapers

Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Top 5 reasons to deploy VMware with Tegile
Data demand and the rise of virtualization is challenging IT teams to deliver storage performance, scalability and capacity that can keep up, while maximizing efficiency.
Reducing the cost and complexity of web vulnerability management
How using vulnerability assessments to identify exploitable weaknesses and take corrective action can reduce the risk of hackers finding your site and attacking it.