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Outsourcing in EMEA enjoys a strong start in 2016

4 May 2016 | Herpreet Kaur Grewal


The outsourcing market in the Europe, Middle East & Africa region got off to a strong start in 2016, according to the EMEA ISG Outsourcing Index.

 

The market has seen “double-digit growth in both contract value and volume”, reveals the data released by technology insights, market intelligence and advisory services company Information Services Group (ISG) (NASDAQ:III).

 

The EMEA ISG Outsourcing Index, which measures commercial outsourcing contracts with an annual contract value (ACV) of €4 million or more, shows that ACV in EMEA reached €2.25 billion in the first quarter – an increase of 19 per cent over the same period in 2015.

 

The region also saw a 28 per cent increase in contracting activity over the same prior-year period. The EMEA results mirrored the global market results, which saw ACV reach almost €5 billion, up 20 per cent year-on-year, and volume grow by 32 per cent.

 

Restructuring drove the market in EMEA, with ACV rising 115 per cent while the number of contracts grew by 91 per cent, making this the second most active quarter ever for restructurings in the region.

 

The value of new scope contracts fell, but with 97 deals signed, activity remained close to the 100-contract level – the sign of healthy contracting activity.

 

Both Information Technology Outsourcing (ITO) and Business Process Outsourcing registered gains in the quarter, with ITO up 20 per cent year-over-year, reaching almost €1.5 billion in ACV from 115 contracts. The boost marked a return to form for ITO, led by applications design and maintenance (ADM) work and contracts bundling applications with infrastructure.

 

BPO started the year with its best first quarter since 2012, increasing over last year’s first quarter with a 41 per cent rise in ACV.

 

The index states that “most of this increased value came from a large award in facilities management and notable strength in contact centre, finance and accounting, and multi-function contracts. The number of BPO awards also saw a healthy increase – up 15 per cent compared with the first quarter of 2015.”

 

John Keppel, partner and president of ISG, said: “The notable value and volume gains in BPO, along with the surge in restructuring activity, reflect growing demand for business outcomes in outsourcing and the opportunity for organisations to digitise and make room for new technologies.”

 

The ISG Outsourcing Index provides a quarterly review of the latest sourcing industry data and trends for clients, service providers, analysts and the media and serves more than 500 clients around the world.