Wednesday 11th November, 2015

According to the latest UK Quarterly Outsourcing Index, compiled by business process outsourcing (BPO) provider and industry analyst Nelson Hall, longer-term agreements were signed in Q3, with average contract lengths rising 38 per cent compared with the second quarter of the year.

The figures also reveal significant year-on-year growth in total UK outsourcing spend, with the value of contracts signed between July and September rising 69 per cent when compared with the same period last year.

Bryan Mouat, CEO of arvato Financial Solutions in the UK & Ireland, commented: "Political certainty following the general election has clearly had a positive impact on the outsourcing industry. With market confidence returning, organisations across the private and public sectors are continuing to turn to outsourcing partners for the expertise and technology to help them achieve their objectives."

Government organisations are the driving force behind the surge in outsourcing, with deals worth £2 billion signed in the third quarter – the largest public sector spend since the first quarter of 2012, according to the research. This represents significant growth from the £105 million spent in the second quarter of this year, and the £275 million agreed in July to September 2014.

The majority of the spend came from central government, with departments agreeing seven contracts worth a total of £1.73 billion for a mixture of multi-scope IT infrastructure deals and shared service agreements for back-office services, such as HR, payroll and finance.

There was also growth in local government, with the total value of agreements signed by authorities increasing by 67 per cent year-on-year, demonstrating that outsourcing remains a key enabler for councils in realising efficiency savings.

According to the research, authorities have largely procured a mixture of multi-scope IT outsourcing contracts focussing on new infrastructure, and BPO deals for revenues and benefits, customer services and payroll.

The telecoms industry was the most active outsourcer outside the public sector in the third quarter, accounting for contracts worth £133 million. The figure represents significant year-on-year growth of 224 per cent, with firms across the sector focusing on BPO deals involving customer service management and pension administration.