Outsourcing spend more than trebled between July and September compared to the second quarter of 2015, with £1.77bn committed to IT deals alone, according to new research.
The UK Quarterly Outsourcing Index found the total value of contracts agreed during the quarter was worth £2.21bn, when other deals such as business-process outsourcing were factored in.
It said the majority of the spend had come from central government, with departments agreeing seven contracts worth a total of £1.73bn for a mixture of multi-scope IT infrastructure deals and shared-service agreements for back-office services. According to the index, the spending figure marked a 69 per cent increase in government outsourcing spend year-on-year.
The total value of agreements signed by local authorities represented a 67 per cent year-on-year increase, with councils largely procuring a mixture of multi-scope IT outsourcing contracts focused on new infrastructure, along with deals for revenues and benefits, customer-services and payroll.
The research, compiled by IT analyst Nelson Hall for outsourcing provider arvato Financial Solutions, also found that that the length of contracts agreed during the July-September quarter had increased by more than one-third compared with the previous three months.
Bryan Mouat, UK and Ireland chief executive officer at arvato, said “political certainty” following May’s general election had clearly had a positive impact on the 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,” he said.
Debra Maxwell, arvato’s chief executive responsible for the public sector, said that new funding cuts expected later this month in Chancellor George Osborne’s spending review would drive further outsourcing growth in local government.
“Councils are increasingly looking to change how they operate and deliver services to leverage significant savings,” she said.