Outsourcing shakes off recession

Businesses spending 13 per cent more on outsourcing than a year ago.

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IT and business process outsourcing is shaking off the recession, according to the latest data from TPI, the outsourcing consultant.

The TPI Index, for the second quarter of 2011, found that the total value of outsourcing contracts increased by 13 per cent, to reach 7.6 billion (6.7 billion).

But the study also found that the average value of IT outsourcing contracts fell during the period, whilst the number of contracts increased. The value of business process outsourcing (BPO) deals more than doubled, to 6 billion (5.5 billion).

Globally, the overall value of the outsourcing market also declined, by 18 per cent compared to the second quarter of 2010. According to TPI, the decline resulted from a drop in the number of "mega-deal" and other large contracts. In the UK, however, TPI found that demand for outsourcing continued to grow, as it has in France and the Netherlands.

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And, despite public sector cost cutting, the number of public sector outsourcing contracts has also increased. Again, though, the trend is towards a larger number of lower value contacts.

"We have actually seen the pace of UK public sector activity increase in 2011, but contract values have declined," said Duncan Aitchison, a partner at TPI. This, he said, reflects a change in emphasis in the public sector, with contracts that either offer best of breed solutions, or short-term cost savings, gaining ground at the expense of larger scale initiatives.

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