The document summarizes the European IT outsourcing market. It finds that Europe is the largest services outsourcing market worldwide, worth $170 billion in 2012. Adoption rates vary across European countries, with services being 14% outsourced on average. The UK and France saw strong growth in outsourcing in 2014 while Germany stagnated. Major drivers for IT outsourcing are economies of scale, IT simplification, and helping IT departments better align with business goals. Emerging trends like hybrid sourcing models and a shift toward smaller, shorter deals will likely impact the European outsourcing market.

1. EUROPEAN IT SERVICES OUTSOURCING
SNAPSHOT & TRENDS
CIONET International
26 August 2014 - Prepared by Frederic De Meyer
@CIONET
CIONET
CIONET
CIONET TV

2. AGENDA
 The outsourcing market landscape in Europe
 Drivers & inhibitors of the European outsourcing market
 New trends in outsourcing
 Major conclusions

3. AGENDA
 The outsourcing market landscape in Europe
 Drivers & inhibitors of the European outsourcing market
 New trends in outsourcing
 Major conclusions

4. 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%

5. DIFFERENCES IN ADOPTION RATE ACCROSS
EUROPEAN COUNTRIES
Source: E&Y 2013
In average, 14% of services are being outsourced in Europe

6. © 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

7. GLOBAL IT SERVICES & OUTSOURCING MARKET
Global market size = 952$Bn
IT Services = 648$Bn
BPO = 304$Bn
Source: HfS Research 2013

8. 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.
© 2014 CIONET
 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

9. PUBLIC CLOUD BECOMES MAINSTREAM IN EUROPE
Public Cloud is growing +30% CAGR
Source: IDC 2012

10. AGENDA
 The outsourcing market landscape in Europe
 Drivers & inhibitors of the European outsourcing market
 New trends in outsourcing
 Major conclusions

11. WHAT’S KEEPING CIO’S AWAKE AT NIGHT…
EU2013
EU2012
EU2011
EU2010
IT & Business Alignment
Business Agility
Business Cost reduction
IT Cost reduction
…..
Business re-engineering (7)
Business Cost reduction
Business re-engineering
Business Agility
IT & Business Alignment
…..
IT Cost reduction (8)
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…

12. 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

13. INHIBITORS TO OUTSOURCING
Source: EmeraldInsights

14. AGENDA
 The outsourcing market landscape in Europe
 Drivers & inhibitors of the European outsourcing market
 New trends in (IT) outsourcing
 Major conclusions

15. SOME MEGADEALS STILL OCCUR
10 year multi-billion deal with IBM
5 year 2,2 billion deal with IBM &
Tata, TCS & Infosys
5 year deal with Atos
multi year 240 million deal with
IBM, Cap Gemini, HCL
Source: CIONET Research
Outsourcing is increasingly used as a strategic differentiator by European
companies, indicating a maturing outsourcing market

16. EMERGING OUTSOURCING TRENDS AND THEIR
RELEVANCE FOR IT SERVICES
Source: multiple, CIONET Research

17. AGENDA
 The outsourcing market landscape in Europe
 Drivers & inhibitors of the European outsourcing market
 New trends in (IT) outsourcing
 Major conclusions

18. © 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.