UK tops European outsourcing league

Britain extended its lead as the top European outsourcer during the second quarter of 2005, according to research revealed today.

Data from Forrester Research indicates that firms in the UK and Germany, in particular in the financial and public sectors, closed most of the €5bn in outsourcing deals between April and June this year.

The analyst firm tracked 67 outsourcing deals exceeding €10m in contract value involving 22 vendors during the report period.

The UK extended its lead, with British firms representing 39 per cent of total outsourcing deals.

Germany and The Netherlands shared the first outsourcing tier with the UK, and Italy propelled itself into this group for the first time with seven major deals. Norway reported four deals brought in by EDB.

In contrast, Finland, Poland and Hungary disappeared from the outsourcing playing field altogether.

Infrastructure outsourcing diminished slightly, and buyers outsourced more than two categories of IT services per deal on average, although the mean deal size shrunk.

The study identified BT Global Services as heading the vendor table for deal value, bagging €2.2bn for a single deal with the UK Ministry of Defence.

Forrester Research noted that infrastructure outsourcing declined for the first time in seven quarters, while telecoms and network outsourcing grew by " leaps and bounds".

Almost a third of this quarter's deals involved telecoms or network outsourcing services, 18 per cent more than a year ago and almost identical to the first quarter of 2005.

Siemens Business Services (SBS) and Gerling signed one of the largest contracts in this space, valued at €300m. SBS will take over, run and maintain the insurer's entire IT infrastructure including PCs, laptops, telephones and networks.

The second quarter of 2005 saw the most business process outsourcing (BPO) deals ever reported in Forrester's surveys. More than a quarter of the deals were BPO agreements, almost twice the proportion found last year.

Boots and Xchanging inked the largest of these, worth €592m, involving outsourcing administrative tasks to manage spending in areas such as corporate travel, facilities management and invoice processing.

Looking at the number of contracts signed in the two most mature outsourcing industries - government/public sector and financial services/insurance - the public sector outpaced the financial services industry for the first time.

The high tech and utilities sectors were both surpassed the results of a year ago.