Cloud Services Dominate as EMEA Region Sees Strong Growth in IT Outsourcing and BPO Investments

Date published : 2024/10/29 23:30

The European market for IT and business process outsourcing (BPO) services has seen a strong start to the year, with $7.5 billion spent by organizations in the region. This represents a 21% increase from the same period last year and marks the first time spending has exceeded $7 billion.

The growth is driven largely by the increasing demand for cloud-based services, which now account for more than half of total spending at $3.9 billion. Within this segment, infrastructure-as-a-service contracts saw a 58% increase to $2.9 billion, while software-as-a-service spend grew by 15% to reach $1 billion.

Traditional IT outsourcing and BPO, referred to as managed services, recorded a 3% increase in spending to hit $3.7 billion. However, IT outsourcing spending fell by 11% due to reductions in spending by financial services and energy companies. In contrast, BPO investments soared by 84% to $971 million, with strong demand across all industries.

The number of managed contracts signed reached a record 256 during the quarter, a 15% increase from the same period last year. The UK saw significant growth, with organizations spending $1.1 billion, a 27% increase from the previous year. Other regions, such as the Nordic and Southern areas, also experienced strong growth of 26% and 93%, respectively.

ISG expects cloud-based services to continue growing globally this year, with a predicted 20% increase in spending. Managed services are also expected to rise by 5%. The growth is attributed to the increasing demand for digital transformation and the need for organizations to adapt to changing market conditions.