IT Outsourcing - Europe

Europe

Revenue in the IT Outsourcing market is projected to reach US$176.40bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 8.23%, resulting in a market volume of US$262.00bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$422.20 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 IT Outsourcing market in Europe has been experiencing significant growth in recent years.

Customer preferences: Many businesses in Europe are outsourcing their IT services to reduce costs and improve efficiency. IT outsourcing allows companies to access a wider range of expertise and resources than they may have in-house. Additionally, outsourcing can provide access to new technologies and innovations that may not be available in-house.

Trends in the market: One trend in the European IT outsourcing market is the increasing popularity of nearshoring. Nearshoring involves outsourcing IT services to countries that are geographically close to the business, rather than to more distant locations such as Asia. This trend is driven by the desire to reduce costs while maintaining close proximity to the outsourced services. Additionally, there is a growing trend towards cloud-based outsourcing, which allows businesses to access IT services remotely, without the need for physical infrastructure.

Local special circumstances: In Eastern Europe, there is a strong tradition of technical education and a large pool of skilled IT professionals. This has made countries such as Poland, Romania, and Ukraine popular destinations for IT outsourcing. Additionally, these countries offer a lower cost of living and lower wages than Western Europe, making them attractive to businesses looking to reduce costs.

Underlying macroeconomic factors: The growth of the IT outsourcing market in Europe is driven by a number of macroeconomic factors. One key factor is the increasing globalization of business, which has led to a greater need for international collaboration and communication. Additionally, the rise of digital technologies has created new opportunities for businesses to improve efficiency and reduce costs through outsourcing. Finally, the ongoing economic uncertainty in Europe has led many businesses to seek out cost savings through outsourcing.

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.