IT Outsourcing - EU-27

EU-27

Revenue in the IT Outsourcing market is projected to reach US$120.70bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 7.81%, resulting in a market volume of US$175.80bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$538.00 in 2024.
In global comparison, most revenue will be generated in the United States (US$197.30bn in 2024).

Key regions: Netherlands, United States, Japan, Germany, Italy

Definition:
The IT Outsourcing market refers to the external contracting of IT functions, services, or projects instead of relying on company-owned resources. By outsourcing IT tasks (e.g., to IT suppliers or software developers), enterprises are able to focus on their core functions and save internal resources and costs (e.g., office space, maintenance, and utilities). Thus, outsourcing teams becomes a viable cost resilience strategy in an environment where companies are looking to save money more than ever.

In an IT context, these activities include IT administration, IT application, and web hosting services. Non-IT-related outsourcing services are excluded.

Structure:

IT Outsourcing contains four distinct markets that are based on different services:

Administration Outsourcing refers to the market for services associated with the external sourcing of typical IT administration tasks such as hardware supply, setup, configuration, maintenance, security, and support.
Application Outsourcing refers to the market for all IT application services in a software production context, spanning from requirement assessments to concept and design of software applications.
Web Hosting includes all types of internet hosting services that allow companies or individuals to provide access to their web page via the World Wide Web.
Other IT Outsourcing refers to aggregated revenues of the types of IT outsourcing that are not specifically mentioned in the other IT Outsourcing markets, such as infrastructure outsourcing, network outsourcing, and managed services.

Additional Information:

The IT Outsourcing market comprises revenues, revenue change, average spend per employee, and revenues of the outsourcing types. Market values represent revenues that are generated by primary vendors either directly or through distribution channels at the manufacturer price level (excluding VAT). Reported market revenues include spending by enterprises (B2B) and governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed. Key players in the market include IBM, Accenture, Capgemini, NTT, and Hewlett Packard Enterprise.

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Market

Region

Region comparison

Currency

Analyst Opinion

The demand for IT outsourcing services in the EU-27 region has been steadily growing in recent years, driven by a variety of factors.

Customer preferences: One of the main reasons for the increasing demand for IT outsourcing services in the EU-27 region is the growing preference among businesses for cost-effective solutions. Outsourcing IT services to countries with lower labor costs can help businesses reduce their operational expenses while maintaining high-quality service levels. Additionally, businesses are increasingly looking for specialized expertise that may not be available in-house, which can be provided by outsourcing partners.

Trends in the market: The IT outsourcing market in the EU-27 region is characterized by a number of trends. One of the most significant is the growing popularity of nearshoring, which involves outsourcing IT services to countries that are geographically close to the home market. This allows businesses to take advantage of lower labor costs while minimizing cultural and language barriers.Another trend in the market is the increasing adoption of cloud-based solutions. Cloud computing has revolutionized the way that IT services are delivered, making it easier and more cost-effective for businesses to access the technology they need. As a result, many IT outsourcing providers are now offering cloud-based services to their customers.

Local special circumstances: While the demand for IT outsourcing services is strong across the EU-27 region, there are some local special circumstances that are driving growth in specific markets. For example, the IT outsourcing market in Eastern Europe is particularly strong, due in part to the region's highly skilled workforce and lower labor costs compared to Western Europe.

Underlying macroeconomic factors: Several macroeconomic factors are contributing to the growth of the IT outsourcing market in the EU-27 region. One of the most significant is the increasing globalization of business, which has led to greater competition and the need for companies to operate more efficiently. Additionally, the ongoing digital transformation of many industries has created a greater demand for IT services, which in turn has led to an increase in outsourcing.Overall, the IT outsourcing market in the EU-27 region is poised for continued growth in the coming years. As businesses continue to seek out cost-effective solutions and specialized expertise, outsourcing providers are well-positioned to meet these needs.

Methodology

Data coverage:

The data encompasses B2G, B2B, and B2C enterprises. Figures are based on enterprises' technology spending on products, consulting, and outsourcing services.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players in the industry, Statista's primary research and surveys, and IT associations. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, internet users, and telecommunication. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the exponential trend smoothing method is used based on the market data characteristics. The main drivers are the GDP and its sector composition, internet penetration, the level of digitization, and the attitude toward IT security.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.