Public sector outsourcing grows in the UK as commercial deals fall again

Public sector contracts accounted for 77% of the total outsourcing spending in the UK in 2010, according to the latest report from consultancy TPI.

UK public sector outsourcing spending also accounted for 92% of the total public sector spend in the Europe, Middle East and Africa (EMEA) region last year.

But despite a late surge, commercial sector spend in EMEA fell for the second year running.

There was an 81% rise in total spending in the final quarter of 2010 compared to the previous three months, with total EMEA region spending at €10.5bn. But this was a 31% drop from the same period last year and spending in the full year 2010 fell 14 % to €30bn.

Despite the fall in commercial outsourcing spending the financial services industry in EMEA increased its total spending by 29%, hitting €10bn for the full year 2010. This was the result of restructuring mega-deals said TPI.

Businesses spending on restructuring helped the industry throughout the year and this will continue, according to Duncan Aitchison, EMEA president at TPI.

"Restructurings were the big story for the European outsourcing market in 2010," he said. "Considering the number of contracts up for renewal in the year ahead, we anticipate that trend will continue, though the value of contracts awarded will likely fall back to pre-2010 levels."