The data, showing Sweden, France and Germany as the strongest Outsourcing markets outside of the United States during 1Q10, are released.
The 1Q10 EMEA TPI Index, which measures commercial outsourcing contracts valued at €20 million or more, recorded just over €7 billion in total contract value (TCV) during the first three months of 2010, up 7 percent over the first quarter of 2009. Sweden more than doubled its full-year 2009 TCV with one single mega-deal, accounting for more than 14 percent of the global market’s TCV. France saw almost €2 billion in TCV awarded, making it the world’s third largest market in the first quarter of 2010 largely due to a mega-deal awarded by SNCF.
Meanwhile, Germany exceeded €1 billion in TCV during the first quarter of 2010 but experienced a drop in global market share. The U.K., historically Europe’s strongest and most mature market, saw a decline of almost 50 percent year-over-year to less than €800 million.
“Even though this is only one quarter’s results, it does appear that the key countries contributing to Europe’s outsourcing performance are shifting to the less mature Continental markets,” said Duncan Aitchison, Partner and President of TPI, EMEA.
Contract restructurings, in which clients renew, renegotiate or expand existing contracts, accounted for 40 percent of regional TCV, far surpassing the previous record of 24 percent set in 2006. Even though restructurings include some additional scope, overall new scope in Europe was down by 22 percent. The number of contracts awarded in the region also declined by 24 percent. This trend, which was also reported globally, challenged the “higher volume, smaller value” contracting trend noted since 2006, but it is not expected to continue.
By industry sector, the Travel, Transportation and Hospitality vertical accounted for one of only two increases in the quarter. With a TCV of €2.7 billion, it nearly quadrupled year-over-year due to the mega-deal awarded by SNCF in France, making it the number one industry vertical in the quarter. The Financial Services sector came in second with a TCV of €2.4 billion, a decline of 23 percent. The Business Services sector increased its TCV by 400 percent to €500M, also due to a mega-deal, tying it for fourth place with the Telecom and Media sector. Manufacturing TCV fell 29 percent year-on-year.