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Outsourcing across the EMEA region has seen a steady overall performance during the past year, according to new analysis. While technological trends have seen the business technique boosted, however, uncertainty regarding the geo-politics of Europe, as well as the UK’s recent Carillion collapse, could hinder further progress in 2018.Global technology research and advisory firm Information Services Group (ISG) has released its latest EMEA Index figures, which have unveiled a startling up-spike in outsourcing revenues in the UK. The ISG’s Index has been tracking the health of the outsourcing industry for 15 years now, and the latest key findings from the leading technology research and consulting firm suggested that the practice of outsourcing in the UK is rapidly outstripping competitors across the EMEA area as a whole.
The Index measures commercial outsourcing contracts with an annual value of €4 million or more, and revealed that year-over-year the EMEA, new trends are reshaping the outsourcing industry. Total value growth was more or less flat compared to the prior year, as traditional sourcing, at €1.9 billion, fell 11%, while as-a-service sourcing, at a record €1.1 billion for the region, was up 27%.Outsourcing demand was particularly boosted by the growing appetite of companies for cloud-based services. The need for such offerings in the EMEA shot up by 41% over the past year, as organisations sought to take advantage of newer technologies. The value of As-a-Service sourcing contracts now stands at €3.9 billion in the region, while the financial services sector continues to lead the way when it comes to cloud adoption. According to a recent study by PA Consulting, two-thirds of businesses that currently outsource IT solutions will continue to do so at the same rate or more, with 35% suggesting that they are planning to ramp up their outsourcing.
At the end of 2017, ISG’s UK Director Steven Hall also predicted that a surge in interest in robotics would see a further boom in technology-related outsourcing. Hall said, “The adoption of automation, machine learning, robotics process automation and cognitive technologies will continue to reshape enterprise strategy and workplaces, with an increasing number of tried-and-tested success stories finally persuading slow-adopters. Indeed, early-adopters are now looking to the next iteration of these technologies, so the race is on for service providers to deliver the goods.”
Summarising ISG’s latest findings, Steven Hall commented, “European businesses are seeing the potential of new technologies to help them on their digital transformation journeys, while reducing costs and improving agility. Macroeconomic uncertainty across Europe makes the business of predictions tricky. Nonetheless, the trend towards as-a-service is one we can expect to see accelerating over the next 12 months, with consistent growth of 20% or higher for the as-a-service market.”While the 2017 figures might point toward another good year for outsourcers in the UK, the practice has come under increasing scrutiny at the turn of the year – particularly in relation to public sector contracts. Since the announcement of Carillion’s collapse, the Government has faced calls for a public inquiry into the conduct of officials – having handed over £1 billion in contracts to the outsourcer, whose troubles were reportedly well known to the Cabinet. One example cited by critics is that just weeks after issuing a profit warning in September, Carillion was awarded a £62 million rail contract, as the Government sought to push ahead with its upgrading of the often maligned rail network. The company issued a total of three profit warnings over 2017. Since the downfall of Carillion, a number of other providers have also come under increasing scrutiny. Interserve, a FTSE 250 firm – which has a £1 billion a year turnover and 80,000 staff worldwide (25,000) of those in the UK, has issued several profit warnings in recent times, while fellow public sector outsourcer Capita has seen share prices plummet despite winning a government contract, worth £31 million, to administer Royal Mail’s pension fund. https://www.consultancy.uk/news/15599/growth-in-uk-outsourcing-industry-nears-20-cloud-main-driver
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