european services outsourcing trends 2014
DESCRIPTION
Presentation about the major trends, drivers and inhibitors of the European IT Services Outsourcing market, given by Frederic De Meyer in Jilin, China in August 2014.TRANSCRIPT
EUROPEAN IT SERVICES OUTSOURCING SNAPSHOT & TRENDS
CIONET International
26 August 2014 - Prepared by Frederic De Meyer
@CIONET
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AGENDA
§ The outsourcing market landscape in Europe
§ Drivers & inhibitors of the European outsourcing market
§ New trends in outsourcing
§ Major conclusions
AGENDA
§ The outsourcing market landscape in Europe
§ Drivers & inhibitors of the European outsourcing market
§ New trends in outsourcing
§ Major conclusions
EUROPE IS THE LARGEST SERVICES OUTSOURCING MARKET WORLDWIDE
Source: Frost & Sullivan 2012
Overall European Services Outsourcing market is worth 170$bn in 2012, European market share for overall outsourcing accounted for 43%
DIFFERENCES IN ADOPTION RATE ACCROSS EUROPEAN COUNTRIES
In average, 14% of services are being outsourced in Europe
Source: E&Y 2013
© 2014 CIONET
OUTSOURCING MARKET TRENDS
§ For the first quarter of 2014, the outsourcing market in EMEA was worth €2.4bn, up 10 percent over the previous quarter and 29 percent over the first quarter of 2013. This represented some 165 new or renewed contracts in the first quarter of this year, an increase of 21 percent on the same quarter last year but only a one percent increase over the previous quarter.
§ UK and France saw tremendous growth, Germany stagnated.
§ EMEA notched its best first-half ACV in 2014, $6.3 billion, in the last six years. Second-quarter ACV of $3.1 billion was up 45 percent from last year, fueled by continued strength in mega deals, new-scope and ITO contracts, as overall contract levels rose 35 percent from the prior-year period.
Source: ISG 2014
DIFFERENCES IN ADOPTION RATE ACCROSS EUROPEAN INDUSTRIES
Automotive and Telecommunications are the biggest spenders in outsourced IT services in Europe
Source: E&Y 2013
GLOBAL IT SERVICES & OUTSOURCING MARKET
Global market size = 952$Bn IT Services = 648$Bn
BPO = 304$Bn
Source: HfS Research 2013
© 2014 CIONET
GLOBAL IT OUTSOURCING (ITO) MARKET TRENDS
§ Total market size for the global ITO industry is expected to reach $648 billion this year, with professional services representing $309 billion of the total.
§ ADM ITO will experience 4.8% year-over-year growth. IT infrastructure management ITO will see 3.8% year-over-year growth and professional services will undergo 3.1% year-over-year growth.
§ Regionally, North America and EMEA (Europe, Middle East, Asia) will continue to account for the vast majority of global BPO contracts.
Source: HfS Research 2013
PUBLIC CLOUD BECOMES MAINSTREAM IN EUROPE
Public Cloud is growing +30% CAGR
Source: IDC 2012
AGENDA
§ The outsourcing market landscape in Europe
§ Drivers & inhibitors of the European outsourcing market
§ New trends in outsourcing
§ Major conclusions
WHAT’S KEEPING CIO’S AWAKE AT NIGHT…
EU20
13
EU20
12
EU20
11
EU20
10
IT & Business Alignment
Business Agility
Business Cost reduction
IT Cost reduction
Business re-engineering (7)
…..
Business Cost reduction
IT & Business Alignment
Business Agility
IT Cost reduction (8)
Business re-engineering
…..
Source: CIONET IT Trends survey 2013
Maximizing business relevance is the single most important concern for European CIO’s nowadays. And outsourcing plays a vital role in this…
ECONOMIES OF SCALE AND IT SIMPLIFICATION ARE MAJOR DRIVERS FOR IT OUTSOURCING
Financial drivers
Business drivers
Human Resources drivers
Technology drivers
Source: CIONET IT Sourcing survey 2013
INHIBITORS TO OUTSOURCING
Source: EmeraldInsights
AGENDA
§ The outsourcing market landscape in Europe
§ Drivers & inhibitors of the European outsourcing market
§ New trends in (IT) outsourcing
§ Major conclusions
SOME MEGADEALS STILL OCCUR
10 year multi-billion deal with IBM
5 year 2,2 billion deal with IBM & Tata, TCS & Infosys
multi year 240 million deal with IBM, Cap Gemini, HCL
5 year deal with Atos
Outsourcing is increasingly used as a strategic differentiator by European companies, indicating a maturing outsourcing market
Source: CIONET Research
EMERGING OUTSOURCING TRENDS AND THEIR RELEVANCE FOR IT SERVICES
Source: multiple, CIONET Research
AGENDA
§ The outsourcing market landscape in Europe
§ Drivers & inhibitors of the European outsourcing market
§ New trends in (IT) outsourcing
§ Major conclusions
© 2014 CIONET
CONCLUSIONS
§ European outsourcing market is mature and growing;
§ Major driver is business relevance need of IT departments;
§ Hybrid shoring models arise and provide great opportunities for Tier-2, specialized providers;
§ Though some mega-deals have emerged in 2014, the market will increasingly move to smaller, shorter ITO deals;
§ New trends in outsourcing will likely impact the European ITO market as well;
§ In-shoring and back-shoring will have limited influence in Europe due to increasing IT skills gap.
