European outsourcing overtakes American, says TPI

FRANKFURT (Reuters) – European companies outsourced more business than their counterparts in the Americas for the first time in 2007 as northern European countries followed Britain‘s lead, outsourcing consultancy TPI said.

The value of outsourcing deals signed in Europe last year was $40.9 bln, compared with $26.6 billion in the Americas. The financial services sector dominated demand for business process outsourcing in Europe and elsewhere, TPI said.

“Companies across Europe are outsourcing in ever greater numbers,” TPI partner Duncan Aitchison said in a statement, naming Germany, the Netherlands, Sweden, Switzerland and France as being particularly active.

TPI, which monitors contracts worth $25 mln and over, estimates active outsourcing contracts worldwide were worth $79 bln at the end of 2007 and predicts the market will grow by 7% this year.

“Given the sustained growth rate we are currently witnessing and the level of activity, particularly in Europe and Asia Pacific, we have every reason to expect similar strength in the market going forward,” Aitchison said.

Business process outsourcing, a high-value activity in which service providers supply people and manage processes as well as providing basic IT services, grew strongly, while human resources outsourcing fell out of favour, TPI said.

The global share of deals awarded to Indian firms rose to 9% this year from 6% in 2006. And so-called European big five: Atos Origin, BT, Capgemini, Siemens and T-Systems awarded 9% of the 2007 outsourcing deals.

India‘s own domestic outsourcing demand, driven by the country’s wider economic success, is also growing. The value of contracts signed in India last year was $5.7 bln, up 77% and surpassing Australia and Japan.

Accenture, HP, IBM and Wipro won many of the outsourcing deals on offer in the Asia-Pacific region.

Outsourcing by Chinese companies grew from a small base to $400 mln worth of contracts.