Thursday 20th November, 2014

According the UK Outsourcing Index by Business Process Outsourcing (BPO) firm Arvato and analysts NelsonHall, local government is a significant growth area with a 164% increase in deal value during the third quarter of 2014, compared to last year.

The study found, almost a quarter (24%) of agreements were either expansions or extensions of existing deals demonstrating a high proportion of successful BPO and IT Outsourcing (ITO) contracts in the UK.

July to September marked the third consecutive quarter of growth in first time outsourcing in the UK market.

Also highlighted was year-on-year growth in onshore deals in Q3 2014. In total 76% of agreements were signed for services being delivered entirely from the UK, compared with 60% in the same period last year.

The public sector was responsible for the biggest proportion of outsourcing spend in Q3 2014, with contracts worth a total £279 million, of which £108 million came from local government deals.

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."

"The local government sector, in particular, has bucked wider trends this quarter with continued growth in deal values compared to the same point in 2013. This shows that the outsourcing sector remains an essential partner to local authorities as they continue to deal with ongoing budget challenges."