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2014 set to be a strong year for EMEA outsourcing

iStock_blue-globe-world-300x300The outsourcing industry in the Europe, Middle East & Africa (EMEA) region is on course to achieve one of its strongest years in a decade according to a leading technology insights, market intelligence and advisory services company.

Information Services Group (ISG) has reported that the Q3 2014 EMEA ISG Outsourcing Index, which measures commercial outsourcing contracts with an annual contract value (ACV) of €4 million or more, found that despite a slower third quarter, ACV across EMEA reached almost €7 billion (€6.99 billion) year to date. This is the third highest year-to-date total in the last ten years.

Commenting on the latest findings, John Keppel, partner and president, ISG, said:

“The EMEA market presents a very encouraging picture so far in 2014, and the level of activity underway leaves us optimistic for the rest of the year. Indeed, 2014 could end up being one of the strongest – if not the strongest – years in a decade.”

The latest figures demonstrate that outsourcing is no longer a Northern European phenomenon, as more outsourcing activity spreads across the continent than ever before. ACV in France for the first three quarters reached more than €1billion, an increase of more than 250 percent on the same period in 2013. Due to increased activity in Spain and Italy, Southern Europe saw ACV reach €0.74 billion, its highest level ever.

As the largest and most mature market in EMEA, the value of outsourcing in the UK has remained largely consistent over the past five years. Both ACV and contract counts increased substantially quarter-on-quarter, up 120 percent and 48 percent, respectively. Despite this, UK values and contract numbers did not quite reach 2013’s third-quarter results.

The growing maturity of the DACH outsourcing market has resulted in a shift towards the award of smaller deals as companies look to leverage the benefits of cloud-based solutions and automation, along with their lower costs. Year to date, this shift has contributed to a decline of 13 percent in ACV compared with 2013.

Across EMEA, third-quarter Information Technology Outsourcing (ITO) ACV rose nearly 15 percent for the first three quarters of 2014 compared with the same period in 2013, while the volume of ITO contracting in EMEA hit an all-time high, with counts up 16 percent.

Keppel said:

“We forecasted that, following the robust first half, the third quarter would see a pause in activity for the region and that has been the case.  We believe this pause is temporary and expect to see both deal activity and values picking up again in the fourth quarter. The impressive performance of less mature markets, especially France and Southern Europe, is yet another reason to be optimistic about the market moving forward. We believe 2014 should turn out to be a strong year for outsourcing in EMEA.”

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