IT outsourcing demand fuels record deal value in first half of 2017

Private sector appetites for IT outsourcing deals show no signs of slowing, with contract values up 68% on 2016, according to the latest half-year Arvato Outsourcing Index.

Outsourcing deals totalling £5.2bn were struck in the UK during the six months to the end of June, with private sector IT-related contracts accounting for £3.8bn of the total, the index shows.

During the same six-month period in 2016, outsourcing deals amounted to £1.2bn, equating to a 68% year-on-year rise overall.

Application management and hosting were cited as being the most popular IT services for the private sector to outsource during the first half of 2017.

Overall, the financial services sector was pinpointed by Arvato as being the most active during the six-month period, agreeing deals worth £2.9bn, which was markedly up on the same period in 2016 when it banked £428m in outsourcing contracts.

The research also picked up on growing demand for outsourcing network infrastructure and security architecture requirements within the sector, as well as an uptick in the use of cloud computing, which collectively accounted for 62% of the overall financial services IT outsourcing spend in the first half of 2017. This, in turn, was up from 5% during the first half last year.

“Strengthening security and data protection are top of the agenda for the sector, and businesses are increasingly turning to partners to deliver resilient infrastructure and architecture in the wake of high-profile cyber attacks and to prepare for the new data privacy legislation,” said Patrick Quinn, CEO of Arvato Financial Solutions UK and Ireland.

Arvato cited the first half of 2017 as representing the strongest half-year performance for the outsourcing market since the first half of 2012, fuelled in no small part by the private sector and – more specifically – the financial services industry.

Debra Maxwell, CEO of CRM Solutions UK and Ireland at Arvato, said the data – compiled in partnership with analyst Nelson Hall – highlighted just how buoyant the market is, despite the economic uncertainty being caused elsewhere by Brexit.

“It’s clear from the research findings that we are yet to see any impact of Brexit on the sector as businesses continue to invest in new technology and transforming their services,” said Maxwell.