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29 May 2014 | Will Green
The total value of new UK outsourcing deals rose 65 per year-on-year to reach £2.1 billion in the first quarter of 2014, according to a study.
The arvato Quarterly Outsourcing Index showed the increase was driven by public sector contracts, which made up £1.5 billion of spend in the period – a 168 per cent year-on-year increase.
However, the value of private sector deals dropped 20 per cent year-on-year to £600 million.
According to the index, compiled in partnership with analysts NelsonHall, 39 deals were struck in the first quarter of the year, of which three quarters were onshore agreements and more than half were first-time outsourcing deals.
Debra Maxwell, managing director of arvato UK, said: “The outsourcing industry is in good health at the start of 2014. A rise in total spend coupled with a high proportion of first-time outsourcing partnerships proves there is a clear business case for outsourcing, and smart organisations continue to use it as a means to achieve their objectives.
“This is particularly true for the public sector, where the strong performance suggests that outsourcing remains a key strategy to reduce costs while protecting frontline services.
“There’s also a positive to be taken from the high proportion of onshore deals. While there remains a place for offshore work in the private sector, more contracts delivered in the UK is good news for the outsourcing industry’s contribution to the economy and the UK’s status as a leading global outsourcing hub.”
Business process outsourcing – mostly HR, payroll, benefits administration and recruitment – represented 71 per cent of deals and £1.3 billion of spend, while IT outsourcing made up 29 per cent (£798 million).