UK outsourcing market dominted by BPO deals in 2015
- The first half of the year saw 70 outsourcing contracts signed worth a combined £2.3 billion
- A total of 39 business process outsourcing (BPO) contracts were agreed across the public and private sectors between January and June at a combined value of £1.4 billion
- Public sector outsourcing spend greatest overall at 60 per cent of total spend
- Transport firms spent £319 million on outsourcing - the highest total contract value across the private sector
Slough, 4th August 2015 – BPO agreements have dominated the UK outsourcing market during the first half of 2015 accounting for 60 per cent of the overall spend, according to the Arvato UK Outsourcing Index.
Across the market, 39 BPO contracts were agreed in both public and private sectors between January and June at a value of £1.4 billion, compared to 31 IT outsourcing (ITO) deals worth £868 million. HR outsourcing remains the driving force behind business process deals in 2015, accounting for 19 BPO agreements coming in at £50 million.
The research, compiled by BPO provider Arvato and industry analyst NelsonHall, shows the public sector was responsible for the largest share of outsourcing spend during the first six months of 2015. According to the findings, public sector organisations spent £1.4 billion on outsourcing agreements, accounting for 60 per cent of the total UK market value for the first six months of 2015.
Outsourcing spend in the sector has been driven by central government, with nine agreements procured in the first half of 2015 at a total value of £581 million. These included five IT outsourcing (ITO) deals focussed on application management and four BPO contracts, which cover services such as HR and fund disbursement processing.
Public sector healthcare providers also contributed a high proportion of spend, with deals worth £403 million signed between January and June.
Debra Maxwell, CEO of CRM & Public Sector, Arvato UK, commented: “The strong performance in the public sector is encouraging, and despite the uncertainty before May’s general election, government organisations pressed on with their outsourcing agendas to prepare for the budget and operational challenges that lie ahead.”
Local government outsourcing continues to strengthen in 2015
The local government outsourcing market is showing positive signs of health, with average contract values rising 40 per cent between January and June of 2015 compared to the same period last year, according to the latest Arvato UK Outsourcing Index.
The findings also show the number of first time outsourcing agreements increased to 63 per cent of deals, compared to 25 per cent in the first six months of 2014.
In total, the first two quarters saw local authorities sign contracts worth £319 million.
Transport and financial services lead in private sector
According to the findings, agreements in the private sector accounted for 40 per cent of the total UK market value at £914 million. The transport industry represented the largest contract value across the private sector, with deals worth £319 million focussing on IT infrastructure and cloud computing. In terms of contract volume, financial services was the most active sector, with 10 deals worth £184 million.