Outsourcing Still Popular With European Firms
Outsourcing is the 'in thing' for European companies who farmed out USD40.5 billion worth of services last year, according to new stats.
Jun 30, 2006
Based on figures from analysts at IDC, Western European outsourcing deals for 2005 increased in value by over USD8 billion compared to figures for 2004. During 2005 the largest outsourcing deals got bigger, with nine "mega deals" together worth USD20.5 billion.
Information services outsourcing and network and desktop outsourcing (NDOS) account for the lion's share of the aggregate value of the top 100 deals, standing at a combined value of USD32.7 billion, IDC's European Services division reports.
"The largest deals in 2005 got bigger, dispelling the myth of the falling-out-of-favour of the mega deal, and confirming the emergence of large-scale multi-sourcing, with five out of nine mega deals awarded by two government agencies," said Jennifer Thomson, IDC European research manager. "While deals got larger in value, they got shorter in length, as customers are less willing to be tied into contracts for long periods. Without the long contract lengths vendors must engineer cost savings in a much shorter time period, while at the same time develop collaborative go-to-market strategies to win large-scale multi-sourcing," she said.
IT is one of the main business services regularly outsourced, and IDC reckons IT service providers are continually operating in an increasingly tougher market where Western European clients have benefited from more than a decade of outsourcing experience.
The government, manufacturing, and financial services sectors dominate the top 100 outsourcing contracts in 2005, accounting for close to 90 percent of the total aggregate value.
The IDC analysts also note that IBM has lost pole position in the Western European top 100 outsourcing deals regarding aggregate value of deals. While Big Blue signed 14 deals in 2005 -- more than any other vendor -- the aggregate value was not enough to offset larger-scale wins by BT Global Services and EDS.
Information services outsourcing and network and desktop outsourcing (NDOS) account for the lion's share of the aggregate value of the top 100 deals, standing at a combined value of USD32.7 billion, IDC's European Services division reports.
"The largest deals in 2005 got bigger, dispelling the myth of the falling-out-of-favour of the mega deal, and confirming the emergence of large-scale multi-sourcing, with five out of nine mega deals awarded by two government agencies," said Jennifer Thomson, IDC European research manager. "While deals got larger in value, they got shorter in length, as customers are less willing to be tied into contracts for long periods. Without the long contract lengths vendors must engineer cost savings in a much shorter time period, while at the same time develop collaborative go-to-market strategies to win large-scale multi-sourcing," she said.
IT is one of the main business services regularly outsourced, and IDC reckons IT service providers are continually operating in an increasingly tougher market where Western European clients have benefited from more than a decade of outsourcing experience.
The government, manufacturing, and financial services sectors dominate the top 100 outsourcing contracts in 2005, accounting for close to 90 percent of the total aggregate value.
The IDC analysts also note that IBM has lost pole position in the Western European top 100 outsourcing deals regarding aggregate value of deals. While Big Blue signed 14 deals in 2005 -- more than any other vendor -- the aggregate value was not enough to offset larger-scale wins by BT Global Services and EDS.