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Private sector outsourcing increases

The private sector outsourcing market soared to a three-year high in 2017 as businesses signed contracts worth £4.93 billion, according to the Arvato UK Outsourcing Index.

The research, compiled by Arvato and industry analyst NelsonHall, found that the total value of contracts signed by UK companies rose 36 per cent year-on-year, from £3.62 billion in 2016 and £1.84 billion in 2015.

Overall the UK outsourcing market saw an increase of nine per cent year-on-year in 2017, with contracts worth £6.74 billion agreed by the public and private sectors over the period.

A surge in technology investment was behind the strong performance in the private sector, according to the findings. Businesses spent £3.82 billion on procuring IT Outsourcing (ITO contracts) agreements in 2017, more than double the value of deals agreed in 2016 (£1.73 billion).

The analysis shows that companies focused their spending on securing multi-process IT deals, which included new hosting services, equipment, network infrastructure, data centres and application management.

Customer services accounted for almost half (46 per cent) of business process outsourcing (BPO) agreements signed by companies last year.

Firms spent a total of £508 million as they looked to deliver improvements in customer experience across traditional and digital channels, according to the findings.

Debra Maxwell, CEO, CRM Solutions UK & Ireland, Arvato, said: “The private sector is increasingly outsourcing more sophisticated work, with firms turning to external partners to introduce new technology and enhance the customer experience.

“This shift towards greater complexity is contributing to more outsourced services being delivered here in the UK. Just two per cent of private sector deals procured last year will be delivered offshore, compared to 12 per cent in 2016, as outsourcing continues to move up the value chain.”

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