No outsourcing deals with a total contract value of over €800 million were signed in Europe during the first three months of this year, outsourcing advisory firms ISG has found. This is the first time this has happened since 2009.
Yearly contract value was in line with historical trends, however, indicating that the European organisations are turning away from long term outsourcing commitments, not outsourcing per se.
The combined contract value of all outsourcing deals (worth €20 million or more) signed in Europe during the quarter was €6.9 billion, ISG found in its TPI Index report. That represented a 39% drop compared to the first quarter of last year. The number of deals signed during the quarter fell by 37% year-on-year, down to 79.
ISG said this decline reflects both the strength of demand for outsourcing a year ago, and also continued uncertainty about the European economic zone.
The company expects outsourcing activity in the EMEA region to pick up in the coming year. “We expect outsourcing activity and TCV to pick up in the second half of 2012 and project full-year results to be in line with historical norms,” said Duncan Aithchison, partner and president for ISG North Europe.