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Commercial outsourcing deals down in EMEA

Microscope contributor
By Billy MacInnes

The total contract value (TCV) of commercial outsourcing deals in the UK and Germany fell by a half in the first nine months compared to 2009, far below the overall decline of 10% experienced in the EMEA market in Q3.


The TCV for EMEA in Q3 was €9bn, with the lacklustre performance largely mitigated by an increase of almost 500% in restructuring activity year on year.


Figures from sourcing and data advisory company TPI said the historically smaller Nordics and Netherlands markets had "provided pockets of strength as a result of a number of large scale restructurings" in the first nine months. 


While Germany and the UK had both performed poorly, TPI suggested that Germany would "see a substantial increase in outsourcing activity by the end of the year". 


New scope in EMEA was down 57 year on year and globally was down 20%. Scope ITO (information technology outsourcing) revenues for EMEA declined for the third consecutive quarter to just over €3bn, down 35% year on year. Business process outsourcing TVC increased 19% to €4.3bn.


Duncan Aitchison, president and partner of TPI EMEA, said there would be continued restructuring in the region but the prospect for large scale new scope awards was "far less predictable and more influenced by the continuing uncertainties in the global and regional economic outlook".

He sounded a gloomy note on the overall performance for 2010. "While we foresee a more robust fourth quarter for outsourcing awards in general, we do not believe it will be as strong as the fourth quarter in 2009 and do not expect it to compensate for the third quarter doldrums," Aitchison said. "It is highly unlikely that full year TCV in 2010 will measure up to last year's results."



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