Monday 11th August, 2014

According to the UK Outsourcing Index by business process outsourcing (BPO) provider arvato and industry analyst, NelsonHall, the UK manufacturing sector spent £130m on outsourcing services during the first half of 2014, representing a 132% year-on-year increase.

The total volume of deals in the manufacturing sector was also up, rising by 50%, along with first time outsourcing which increased from 33% in the first half of 2013 to 66% for the first six months of this year.

arvato says the increase in outsourcing activity is being driven by broader growth in the manufacturing sector. Figures from the British Chamber of Commerce released in July, based on a survey of almost 7,000 companies in the manufacturing and services sectors, found that 42% of manufacturers reported a rise in domestic sales in Q2 2014.

Debra Maxwell, Managing Director of arvato UK, said: "While not seen as a traditional market for business process and IT outsourcing, manufacturers under increasing growth pressure are turning to outsourcers to help support non-core functions."

The index found that in local government, the outsourcing market continues to mature as 75% of all agreements were renewals, extensions or supplier changes.

The private sector dominated the volume of outsourcing deals in Q2 2014 with a 95% share of the total number of agreements secured. Telecoms & media, financial services and energy & utilities were particularly active industries, which together accounted for 70% of total spend (£513m).

BPO deals were most in demand, accounting for over half (52%) of all agreements. HR outsourcing - which includes services such as payroll, benefits administration and recruitment process outsourcing - was the dominant service line.