Public sector dominates UK outsourcing so far this year

Public-sector outsourcing accounted for three-quarters of spending in the first three months of this year, according to analyst NelsonHall.

Its first quarterly report, commissioned by business services firm Arvato, showed that BPO (business process outsourcing) and IT outsourcing in the UK was worth £2.1bn in the first quarter, a rise of 65% on last year's first quarter. There were 39 deals in total.

In the public sector, contracts worth £1.5bn were signed, a figure 168% higher than in the equivalent period last year.

Local government increased spending by 58%, while private sector deals decreased by 20%.

The research pointed to more outsourcing to onshore suppliers, with 75% of the contracts completely onshore, all work being delivered in the UK.  

Debra Maxwell, managing director of Arvato UK, said: “There is a positive to be taken from the high proportion of onshore deals. While there remains a place for offshore work in the private sector, more contracts delivered in the UK is good news for the outsourcing industry’s contribution to the economy and the UK’s status as a leading global outsourcing hub.”

More than half of the contracts (59%) in the quarter were signed by businesses that had not outsourced before.

Paul Hinton, commercial technology partner at law firm Kemp Little, told Computer Weekly recently that in finance, high-fashion retail, professional services, government sectors and pharmaceutical organisations there is a current trend to outsource IT for the first time.

Research involving 1,300 businesses in Europe from Whitelane Research earlier this month revealed an appetite for IT outsourcing in Europe. It found that 42% of organisations will outsource more IT in 2014 than they did in 2013 and 36% will outsource the same amount. Only 10% said they will outsource less IT and 12% said they currently do not outsource IT.