Europe bucks global outsourcing trend

The number of European outsourcing contracts worth over €200m (£140m) signed so far this year has leapt 83 per cent on 2002, as deals on the continent overtake those in the rest of the world.

To date this year, 22 mega deals have been signed in Europe, compared with 12 contracts in 2002. Globally, 54 major deals have so far been signed, worth a total of €37.2bn, compared with 51 deals, worth €33.8bn, by this time in 2002.

Mega deals signed at the back end of last year, all with IBM, included JP Morgan (€5bn), Deutsche Bank (€2.6bn), and retailer Boots (€1.1bn).

According to research by Technology Partners International (TPI), which advises on outsourcing deals, European contracts signed so far in 2003 represent almost 41 per cent of all contracts in the €200m-plus band.

Big outsourcing deals are becoming more common in Europe than ever before and are now outstripping the rest of the world, added TPI.

Despite the increasing popularity of business process outsourcing (BPO) projects and offshore contracts, the number of contracts worth at least €50m in Europe showed a much less dramatic five per cent increase, although average total contract values surged 39 per cent to €442m.

Duncan Aitchison, managing director of TPI's international business, told vnunet.com: "Larger contracts are more prevalent in Europe than ever before.

"My instinct tells me that it is due to a maturing of the outsourcing market, and larger organisations are taking bolder steps.

"We are also seeing increasing use of sourcing relationships not just for cost reduction but to drive change in the way things are done."