Outsourcing megadeals boom in EMEA

Sourcing advisory consultancy TPI has released figures showing that enterprises are reacting to tougher economic conditions by upping their existing outsourcing contracts and signing up to new deals, with the highest growth, up 58% year-on-year, seen in EMEA.

The region is now also understood to account for just over 61% of the global outsourcing market so far in 2008.

Worldwide, TPI revealed that 282 outsourcing contracts totalling well over €39bn in value have been signed this year, a figure it has claimed is the strongest half-yearly performance in the past decade. EMEA represents over €25bn of the total.

When it came to megadeals, which TPI defines as contracts valued at over €800m, EMEA accounted for 10 out of 13 deals.

“European companies are expressing their concerns regarding the softening business climate by taking steps to reduce operating costs and restructure the nature of their business-support functions to have a more variable cost profile,” said TPI partner and president Duncan Aitchison.

Aitchison believed that this practice not only produced some short-term cost savings, but also positioned enterprises favourably for renewed growth in the future.

“While I wouldn’t call today’s attitude towards cost reduction desperate, there is certainly a tone of urgency in play,” Aitchison added.

Given the strong first half of 2008, TPI is now forecasting global annualised revenue growth from outsourcing to grow 10% to around €70bn by December, with a “record sum” a distinct possibility in spite of the traditionally soft third quarter.