UK IT outsourcing could increase 600 percent by 2020

Outsourcing in the UK’s IT sector could increase by a massive 600 percent over the next ten years, according to a new report by the Everest Group for Egypt’s Information Technology Industry Development Agency (ITIDA).

The study, entitled Europe’s Global Sourcing Market: Trends, Growths and Prospects, revealed that the UK had the largest and “most evolved” outsourcing market in Europe, growing by 36 percent between 2004 and 2009. High local costs and the large English-speaking population among foreign countries are seen as the primary contributing factors to this.

Despite the fact that the UK’s global sourcing market is seen as relatively mature, the report also revealed strong potential that has yet to be realised, with possible growth of up to 600 percent by 2020 to a market worth between $55 billion and $60 billion.

“The European global sourcing market has assumed an increasing significance over the past few years, spreading across countries, verticals and services,” said Eric Simonson, Managing Partner at the Everest Group. “The potential is huge; we estimate the European global sourcing opportunity to be US $250-300 [billion].”

In fact, Europe is set for substantial growth in outsourcing across the board. The increase to $300 billion would make a 1,100 percent jump on the current size of Europe’s global sourcing market, which will most likely be led by countries trying to bring down national deficits, sovereign debt, and stabilise the market turmoil throughout Europe.

Dell, which has a strong European base of operations and its European headquarters in the UK, is not so convinced that outsourcing alone is the appropriate answer to the myriad of difficulties companies are facing in the current economic climate.

“Dell Education Services wholeheartedly supports outsourcing but only if it is part of a broader strategy to address the challenges facing businesses today,” said Martin Hill at Dell Education Services.

“It’s crucial to look at outsourcing as one part of a broader fix, which also includes investment and support for existing people and resources. Developing the IT skills of existing staff across the workforce for example, improves their ability to maximise the potential of existing technology to increase business performance, reduces the pressure on under-resourced IT departments, and boosts morale.

“Like outsourcing, it’s part of the solution required to deal with today’s commercial challenges.”