IT Outsourcing - United Kingdom

United Kingdom

Revenue in the IT Outsourcing market is projected to reach US$39.99bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 9.53%, resulting in a market volume of US$63.04bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$1.15k 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

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Analyst Opinion

The IT Outsourcing market in United Kingdom has been experiencing steady growth in recent years.

Customer preferences: One of the major factors driving the growth of the IT Outsourcing market in United Kingdom is the increasing demand for cost-effective and efficient IT solutions. Many companies in the country are looking to outsource their IT services to reduce costs and improve their operational efficiency. Additionally, the trend towards digital transformation has also led to an increase in demand for IT outsourcing services, as companies seek to leverage new technologies to improve their business processes.

Trends in the market: One of the key trends in the IT Outsourcing market in United Kingdom is the growing popularity of nearshore outsourcing. This involves outsourcing IT services to countries that are geographically close to the United Kingdom, such as Ireland or Poland. Nearshore outsourcing offers several advantages, including lower costs, similar time zones, and cultural similarities, which can help to improve communication and collaboration between the outsourcing company and the service provider.Another trend in the market is the increasing use of cloud-based outsourcing solutions. Cloud computing has become increasingly popular in recent years, as it allows companies to access IT services and resources over the internet, without the need for expensive hardware or software. This has led to a rise in the number of cloud-based IT outsourcing solutions, which can offer significant cost savings and flexibility for companies of all sizes.

Local special circumstances: One of the unique characteristics of the IT Outsourcing market in United Kingdom is the presence of a large number of small and medium-sized enterprises (SMEs). These companies often have limited IT resources and expertise, and may struggle to keep up with the latest technological developments. As a result, many SMEs in the United Kingdom are turning to IT outsourcing providers to help them manage their IT infrastructure and systems.

Underlying macroeconomic factors: The growth of the IT Outsourcing market in United Kingdom is also being driven by several underlying macroeconomic factors. The country has a highly developed IT infrastructure and a skilled workforce, which makes it an attractive location for IT outsourcing providers. Additionally, the uncertainty surrounding Brexit has led many companies to seek out more flexible and cost-effective IT solutions, which has further boosted the demand for outsourcing services.

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.