Public sector outsourcing spend softens

The private sector dominated the UK outsourcing market in Q1 of 2019, whilst public sector spend fell year-on-year according to the Arvato UK Outsourcing Index.

The research, compiled by business outsourcing partner Arvato CRM Solutions UK and industry analyst NelsonHall, shows that government organisations procured deals worth £51 million between January and March, down from £91 million during the same period in 2018.

Government departments which procured contracts in Q1 focused spending on technology and digital services. Data centre outsourcing and application management were the most popular services, according to the research. The findings showed that 64 per cent of all government deals were to enable access to technology through new frameworks, a key strategy for delivering efficient digital transformation.

Looking at outsourcing in general, the findings show that energy and utilities firms were the most active buyers of customer services in Q1, accounting for 60 per cent of the total volume deals signed. Business spending on outsourcing was dominated by telecoms and financial services firms, with companies in these sectors agreeing deals worth £446 million and £104 million respectively.

Debra Maxwell, CEO of Arvato CRM Solutions UK, said: “Businesses recognise that providing outstanding customer service across every channel has become a crucial differentiator across almost every sector. As companies continue to invest, it’s clear that firms see significant value in partnering with specialist providers to ensure they have the expertise and technology needed to deliver the highest quality service.

“Overall, we’ve seen a more subdued market in the first quarter of 2019. Ongoing Brexit uncertainty and the impact of GDPR implementation is continuing to influence and delay purchase decisions, so it is to be expected that procurement teams are putting buying decisions on hold, particularly in the public sector.”