Outsourcing Spending Trends and Directions in Western Europe: How Does 1H06 Shape Up and What Will Drive Future Opportunities?

Companies (both vendors and clients) realize that they need to tread more carefully and avoid the mistakes of the initial outsourcing push. A more selective approach to outsourcing characterizes the first six months of 2006 and in the majority of cases, a thorough verification of vendor capabilities precedes any contract negotiations. Nevertheless, organizations are more adept at outsourcing ? cost cutting and efficiency gain underpin the base strategy; however, focus on productivity and innovation will spur further outsourcing evaluation and opportunities.

This IDC study analyzes the spending trends and investment directions evident for outsourcing in the European market in the first six months of 2006. It looks at short-term market expectations, and provides insight into how an understanding of "business evolution cycles" can aid in constructing outsourcing value propositions.

"Overall, outsourcing demand is there, but a cautious client attitude pervades driven by market maturity and client experience. This demands a new approach or really a rethink of the provision of outsourced services. Understanding business evolution cycles and the corresponding outsourcing value proposition will help in assessing and mapping opportunities for growth," said Jennifer Thomson, research manager, IDC European Services Group.