Monday 24th July, 2017
A rise in the number of traditional sourcing contracts fueled overall market growth in the Europe, Middle East and Africa (EMEA) region in the second quarter, according to the findings by research and advisory firm ISG.
ACV (annual contract value) for the combined EMEA market (including both as-a-service and traditional sourcing) reached €2.8 billion in the second quarter, up 13 percent. Traditional sourcing grew 5 percent to €2 billion on the strength of 188 contract awards.
The UK saw quarterly values return to recent norms following the record-breaking first quarter. The 51 contracts signed in the second quarter yielded €630 million, a decline of 56 percent sequentially, and 6 percent year on year. Only one mega relationship was signed in the UK in the second quarter compared with the four signings in the first quarter that drove values up substantially. For the half year, more than €2 billion was awarded, the strongest UK performance in five years.
Barry Matthews, partner, ISG, said: "Traditional sourcing continues to account for the lion's share of contracting in EMEA but the as-a-service segment is growing, albeit at a less aggressive rate than we have seen in the Americas and Asia Pacific regions. Looking ahead to the rest of 2017, we expect a robust second half for EMEA, with traditional sourcing spend growing by a mid-single-digit percentage for the year, while as-a-service spending is expected to remain fairly flat."
ISG’s EMEA Index™ measures commercial outsourcing contracts with an annual contract value (ACV) of €4 million or more.