Outsourcing Contracts Decline Across EMEA

By Freddie Pierce
Information Services Group's EMEA TPI Index has reported that outsourcing contracts have declined by 29 percent year-over-year in Europe, the Middl...

Information Services Group's EMEA TPI Index has reported that outsourcing contracts have declined by 29 percent year-over-year in Europe, the Middle East and Africa (EMEA). 

Dropping 11 percent from first-quarter 2012, the total contract value dropped a whopping 21 percent in one year, from second quarter 2011 to present, according to ISG.ComputerworldUK reports that both IT outsourcing (ITO) and business process outsourcing (BPO) deals were slammed by fears over the Euro. ITO fell to €9.1 billion (a 26 percent decline), while BPO fell to €5.1 billion (a 27 percent decline).

In diagnosing the causes for this staggering drop in contracts, professionals at ISG and elsewhere note several factors. "The shortfall in EMEA stems from a drop-off in the pace of smaller contract awards, as well as the absence of significant mega-deal activity," said EMEA partner at ISG Duncan Aitchison. 

The UK has seen a significant slump regarding Euro troubles, with contracts down 16 percent year on year. According to KPGM Institutes, the number of companies in the UK who are "certain to outsource more," in the future has fallen from 25 percent just two years ago. Additionally, 46 percent were ambivalent in recommending their service provider, and 12 percent expressed dissatisfaction.

Aitchison says he foresees the UK to move forward again, "with greater aggression." He says UK companies will look to different options like multi-sourcing to bridge the gap in outsourcing declines.

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