IT outsourcing up by 15% last year

IT outsourcing up by 15% last year

Spending on IT outsourcing services increased by 15 per cent year-on-year to £3.44 billion, a new report has found.

The UK Quarterly Outsourcing Index 2014 compiled by business outsourcing provider arvato, found that the most in-demand service was that of multi-scope infrastructure management, which saw spending of £899 million.

Around £772 million was spent on application management, while another £485 million was shelled out on network management contracts.

The report also found that only eight per cent of IT outsourcing contracts to be signed by UK firms over the last year involved services being transferred offshore.

In terms of particular industries, the study found that the energy and utilities sector was the most likely to outsource IT services, recording deals worth £1.05 billion over the course of 2014 alone.

"Outsourcing has mistakenly become synonymous with offshoring, yet our research demonstrates that UK delivery is continuing to play a fundamental role in the industry as customer requirements become more sophisticated," said Debra Maxwell, managing director of arvato UK.

"This sophistication is perhaps most easily recognised in the field of customer services. Traditionally typified by voice and email communication, in 2014 it became the norm for these functions to be integrated with more sophisticated digital services like web chat and social media management."

She added that offshoring IT services was always going to play a role in meeting the needs of certain businesses, although there was likely to be a greater demand for more sophisticated solutions.

According to Ms Maxwell, the level of salary inflation in traditional offshore locations meant the UK was likely to continue its dominance of the market.