Value of UK outsourcing deals drops by £300 million

Will Green is news editor of Supply Management
13 November 2014

There has been a “slight softening” in UK outsourcing activity in the third quarter of 2014, with the total value of deals signed dropping by more than £300 million.

According to the arvato UK Quarterly Outsourcing Index, compiled by NelsonHall, 25 deals were signed between July and September totalling £421 million, compared with £734 million spent in the second quarter.

The public sector was responsible for the biggest proportion of outsourcing in the third quarter, with contracts totalling £279 million, while the energy and utilities sector was the most active in the private sector with deals worth £73 million.

New requirements being brought to market for the first time represented 64 per cent of deals and 76 per cent of agreements were for services delivered entirely from the UK.

Debra Maxwell, managing director of arvato UK, said: “While the outsourcing industry has not yet matched the high levels of activity seen at the start of the year, our analysis of the third quarter of 2014 holds some promising signs for its health and contribution to the UK economy, in the sustained growth of first time outsourcing and onshore delivery.”

According to arvato, human resources outsourcing is “moving up the value chain” and accounted for a quarter of all deals signed so far in 2014.

The average value of HR outsourcing contracts increased 24 per cent year-on-year in the third quarter of 2014 to £10 million.

Maxwell said larger contract values in HR “reflect growing maturity in the sector, with outsourcing moving up the value chain to deliver more sophisticated solutions, beyond transactional services".

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