1998`s Top 100 European Outsourcing Deals Worth $23.4 Billion, According to IDC

Six of the top 100 outsourcing deals in Europe in 1998 were megadeals, worth more than $1 billion and accounting for an amazing 71% of the $23.4 billion total contract value signed, according to new International Data Corporation (IDC) research. Of these megadeals, only two were global, with the remainder being European. Last year`s deals saw a mix of the usual global players, such as IBMGS, Andersen Consulting, EDS, and CSC, as well as a slew of European players including Atos, Cap Gemini, debis Systemhaus, FI Group, ICL, Sema Group, and Siemens Business Services.

"Surprisingly none of the megadeals or even very large contracts was won in the manufacturing sector, which accounted for more than a quarter of the deals won in 1998," said Mirko Lukacs, manager of the European Consulting and Management Services program. "This shows the megadeal activity in Europe is shifting toward other industries such as banking and telecommunications, where business pressures are enormous." Banking and finance represented the second-largest sector with 17% of the deals won in 1998. The government sector accounted for 15% of the deals, which represented a 50% decrease over the previous year. "Telecommunications showed a tremendous amount of outsourcing activity in terms of contract value," Lukacs added, "and we believe this is just the beginning."

Key Trends in European Outsourcing

Deals based on flexibility, reliability, and risk/reward sharing are increasing, especially for larger contracts. Many companies are demanding best-of-breed services; as a result, outsourcing competitors should team up and form vendor consortia. . Business process outsourcing deals (focused at managing an entire business department or process) are on the rise, notably in the areas of human resources and customer care.

The number of competitors is rising steeply. The Big Five firms as well as hardware, software, and telecommunication firms are entering or expanding into this marketplace.

The United Kingdom remained by far the most active outsourcing region in Western Europe. Germany, traditionally more reluctant toward outsourcing, represented 11% of the deals and was second after the United Kingdom. South European countries were catching up, with many deals signed in this region. France proved to be the exception with only 4% of the top 100 outsourcing deals signed in 1998, scoring below Italy, Spain, and Switzerland.

IDC`s Top 100 European Outsourcing Deals of 1998 includes a detailed listing of outsourcing deals in Europe, vertical market and geographic analysis, and a summary of key trends from the outsourcing deals winnings in 1998. This report is available for purchase from your local IDC office.