A report on a desk

Q2 2016

UK businesses increasingly integrating digital customer services, research finds

£706 million spent on customer service outsourcing in the first half of 2016 as UK companies respond to changing consumer behaviour, according to the Arvato UK Outsourcing Index

£706 million

Spend on customer services outsourcing reached £706 million, up from £62 million in the same period last year

£47.5 million

Average contract value in H1 2016 increased by 16 per cent year-on-year to £47.5 million


83 per cent of UK customer service outsourcing contracts were multi-channel in H1 2016, compared to 50 per cent in 2015


Spending in local government rose 84 per cent year-on-year to £684.9m

£3.91 billion

Value of UK outsourcing grows 19 per cent year-on-year to £3.91 billion in January to June 2016

59 months

Average contract contract length in H1 2016 increased to 59 months compared
with an average of 52 months in H1 2015

UK businesses are increasingly integrating digital and traditional customer service channels to adapt to changing consumer behaviour, according to the Arvato UK Outsourcing Index.

Analysis of customer service outsourcing deals signed in the first half of 2016 (H1 2016), found that 83 per cent of contracts covered multi-channel services, compared with just 50 per cent in the same period in 2015.

The Arvato UK Outsourcing Index, compiled by business process outsourcing (BPO) provider Arvato and industry analyst NelsonHall, also found that total spend on outsourced customer services reached £706 million in H1 2016, a sharp rise on the £62 million worth of deals agreed in the first half of 2015.

Debra Maxwell, CEO of CRM Solutions, UK & Ireland, Arvato, commented: “UK brands are increasingly alive to the fact that it’s no longer acceptable to dictate to customers how and when they should make contact.

“As companies seek to provide a seamless customer journey, outsourcing providers have responded with contact centre models that integrate traditional phone and email support with newer channels, such as web chat, video and social media. As our research shows, this is becoming the norm in the UK market, to the benefit of consumers.”


Outsourcing Market Undamped By Brexit Uncertainty In H1

Overall, UK outsourcing contracts worth £3.91 billion were signed in H1 2016, representing a 19 per cent year-on-year rise.

The private sector was responsible for the bulk of spend (£2.20 billion). IT outsourcing spend also grew, with the value of contracts across both public and private sectors surging 63 per cent year-on-year to £2.63 billion.

Bryan Mouat, CEO, Arvato Financial Solutions, UK & Ireland, commented: “The UK market remained buoyant in the first half of the year despite the political and economic uncertainty in the run up to the EU referendum. This supports the view that organisations continue to see outsourcing as an effective strategy to tackle key challenges and fluctuation in demand, but it remains to be seen if the prolonged uncertainty following the vote to leave will dampen spending in the second half of the year.”

According to the findings, average contract value for all deals agreed in the UK in H1 2016 increased by 16 per cent year-on-year to £47.5 million. Agreements also lengthened in the first two quarters of 2016, up 14 per cent to 59 months average deal length.

Local Government Market Remains Buoyant

The value of outsourcing contracts across local government saw an 84 per cent year-on-year rise in the first half of 2016, with deals signed worth a total of £684.9 million.

The research found sharp growth in the number of deals procured by local authorities, up 50 per cent compared with the period January to June last year. According to the findings, average deal value saw a 22 per cent increase while the proportion of new work coming into the sector reached 72 per cent compared with 50 per cent in the first half of 2015.

The rise in local government spending comes as the value of wider public sector contracts dipped by two per cent year-on-year. Councils largely focused on securing deals for IT services such as network and application management between January and June, while BPO contracts signed included revenues and benefits and blue collar work.

Debra Maxwell, said: “The sustained growth in local government outsourcing that we’ve witnessed over the last 18 months has continued in the first half of 2016, reflecting the ongoing pressure on local authorities to adapt, innovate and transform.”

Other headlines from q1 2016 index include

Overall 56 per cent of spend came from businesses with 44 per cent coming from the public sector

£1.16 billion was spent on business process outsourcing (BPO) deals with agreements for ITO accounting for £2.63 billion

Combined BPO & ITO deals represented £139 million in contract value

The Arvato UK Outsourcing Index is compiled by leading BPO and IT outsourcing research and analysis firm Nelson Hall, in partnership with Arvato UK. The research is based on an analysis of all outsourcing contracts secured in the UK market during the first two quarters of 2016.

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