The value of European outsourcing contracts signed this year jumped 66 per cent over 2002 to reach €26.4bn.
Although globally the total number of new private sector outsourcing deals stayed flat over the past 12 months, there was a big increase in outsourcing deals across Europe, according to new figures from outsourcing advisor TPI.
But predictions of a huge boom in business process outsourcing (BPO) have failed to materialise. And despite much speculation, the volume of transactions valued at more then €50m has been modest across the globe.
The number of BPO deals worth €50m plus signed globally fell seven per cent in 2003 to 48, with the total contract value down almost 20 per cent compared with the previous year.
Financial services and manufacturing dominated the BPO space, between them accounting for 55 per cent of all BPO contracts.
And while the number of HR BPO deals saw a modest 3.6 per cent increase, and finance and accounting deals declined, companies are warming to the idea of multi-function deals, the number of which increased 139 per cent in Europe and 42 per cent globally.
Duncan Aitchison, managing director of TPI's international business, told vnunet.com: "Despite all the noise, the BPO market has not moved particularly fast.
"It's partly a wait-and-see approach and partly because companies are realising that BPO deals are more complex to put together."
The number of outsourcing mega-deals worth at least €1bn increased by 25 per cent, with 20 being signed, although the total contract value was down 10 per cent to €31.15bn.
And while IBM, EDS, CSC and Hewlett Packard continue to dominate the global outsourcing market, a far greater number of new players are being included on tender lists, with smaller players succeeding in taking some market share away from those at the top, particularly from EDS.
"EDS is taking a very cautious approach to market. There are some issues in terms of its appetite for competition in the face of some aggressive competition," said Aitchison.
"But it is still a serious player with a very substantial customer base and I don't suppose it's in any danger of self-combustion."
The report also shows that offshore outsourcing is now well established, although this is mirrored with a greater realisation that moving white-collar jobs offshore is more complicated that companies initially thought.
"There have been a lot of statements of intent about offshore in the last 18 months as if it were an end in itself, but offshore is merely a delivery mechanism," said Aitchison.
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