Outsourcing in the UK slows down in early 2012

Outsourcing in the UK has slowed considerably in the first three months of 2012 with the total value of contracts signed falling well below both the same period last year and the average for the last five years.

The latest figures from Information Services Group’s (ISG) TPI index revealed that the total value of outsourcing contracts in the UK was €2.5bn, compared to €3.5bn for the same period last year and an average of €3bn over five years.

A total of 29 outsourcing contracts worth more than €20m were signed in the UK during the quarter, compared to 38 in the previous quarter and 42 in the same period last year.

In the Europe, Middle East and Africa (EMEA) region as a whole, total contract value dropped 32% in the quarter compared to a year ago to €6.9bn. A total of 79 contracts were awarded in the first quarter which was a decline of 37% on last year.

ISG said a similar slowdown was seen in early 2006 and early 2010.  “In EMEA, this ‘hangover effect’ during the first quarter of 2012 was compounded by the uncertainty caused by ongoing Eurozone financial concerns," said Duncan Aitchison, president of ISG North Europe.

“This first-quarter slowdown in EMEA follows the strongest half-year and full-year results we have seen in a decade, which made for very difficult comparisons. However, we expect outsourcing activity and total contract value to pick up in the second half of 2012 and project full-year results to be in line with historical norms.”