IT Outsourcing - Northern Europe

Northern Europe

Revenue in the IT Outsourcing market is projected to reach US$17.90bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 7.84%, resulting in a market volume of US$26.11bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$968.00 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.

For more information on the data displayed, use the info button right next to the boxes.

Market

Region

Region comparison

Currency

Analyst Opinion

The IT Outsourcing market in Northern Europe has been experiencing steady growth in recent years, driven by various underlying macroeconomic factors and customer preferences.

Customer preferences: Northern European countries have a highly skilled workforce and a strong focus on innovation, which makes outsourcing IT services an attractive option for many businesses. Additionally, the region has a reputation for being reliable and efficient, which is highly valued by customers. Many companies also prefer to outsource IT services to Northern Europe due to the region's strict data protection laws and high security standards.

Trends in the market: Denmark, Sweden, and Norway are the largest IT outsourcing markets in Northern Europe, with Finland and Iceland also showing steady growth. The region has seen an increase in demand for cloud-based services, as well as an emphasis on digital transformation and automation. Another trend in the market is the rise of nearshoring, where companies outsource IT services to countries that are geographically close to their home country. This trend has been driven by the need for faster turnaround times and better communication.

Local special circumstances: Northern Europe has a highly competitive IT outsourcing market, with many established players and new entrants. The region has a strong focus on sustainability, which has led to an increase in demand for green IT outsourcing services. Additionally, there is a growing trend towards outcome-based pricing models, where customers pay for specific results rather than the time and resources used.

Underlying macroeconomic factors: Northern Europe has a stable economy and a strong focus on innovation and technology. The region has a highly educated workforce and a favorable business environment, which makes it an attractive location for outsourcing IT services. Additionally, the region's proximity to other European countries and its strong transportation infrastructure make it an ideal location for nearshoring. The COVID-19 pandemic has also accelerated the trend towards remote work, which has further boosted the demand for IT outsourcing services in Northern Europe.

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.