IT Outsourcing - EMEA

EMEA

Revenue in the IT Outsourcing market is projected to reach US$193.30bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 8.39%, resulting in a market volume of US$289.20bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$184.60 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 EMEA is experiencing significant growth and development.

Customer preferences: Customers in the EMEA region are increasingly turning to IT outsourcing services to meet their business needs. This is driven by several factors, including cost savings, access to specialized expertise, and the need to focus on core business functions. Outsourcing allows companies to reduce their IT costs by leveraging the expertise and infrastructure of service providers. Additionally, outsourcing provides access to a global talent pool, allowing companies to tap into specialized skills and knowledge that may not be available locally. Finally, outsourcing allows companies to free up internal resources and focus on their core competencies, leading to increased efficiency and productivity.

Trends in the market: One of the key trends in the IT outsourcing market in EMEA is the increasing demand for cloud-based services. Cloud computing offers numerous benefits, including scalability, flexibility, and cost savings. As a result, many companies are looking to outsource their IT infrastructure and applications to cloud service providers. This trend is driven by the need for companies to quickly scale their IT resources to meet changing business requirements, as well as the desire to reduce upfront infrastructure costs. Another trend in the market is the growing popularity of nearshoring. Nearshoring involves outsourcing IT services to countries that are geographically close and culturally similar to the customer's home country. This trend is driven by several factors, including the desire to reduce language and cultural barriers, as well as the need for real-time collaboration. Nearshoring allows companies to benefit from cost savings while still maintaining close proximity to their outsourced IT teams.

Local special circumstances: In the EMEA region, there are several local special circumstances that impact the IT outsourcing market. One of these is the presence of a highly skilled and educated workforce. Many countries in the region, such as India and Poland, have a strong IT talent pool and are known for their expertise in areas such as software development and data analytics. This makes the region an attractive destination for companies looking to outsource their IT functions. Another local special circumstance is the focus on data protection and privacy regulations. The European Union, in particular, has implemented strict data protection laws, such as the General Data Protection Regulation (GDPR). These regulations require companies to ensure the security and privacy of personal data, both within their own organization and when outsourcing to third-party service providers. As a result, companies in the EMEA region are increasingly looking for IT outsourcing partners that can demonstrate compliance with these regulations.

Underlying macroeconomic factors: There are several underlying macroeconomic factors that are driving the growth of the IT outsourcing market in EMEA. One of these is the increasing globalization of business. As companies expand their operations globally, they are looking for ways to streamline their IT functions and reduce costs. Outsourcing allows companies to leverage the expertise and infrastructure of service providers in different countries, enabling them to operate more efficiently on a global scale. Another macroeconomic factor is the increasing adoption of digital technologies. As companies embrace digital transformation, they are looking for IT outsourcing partners that can help them navigate the complex landscape of emerging technologies. This includes areas such as artificial intelligence, machine learning, and Internet of Things. Companies in the EMEA region are investing in IT outsourcing to gain access to the specialized skills and knowledge needed to implement and manage these technologies. Overall, the IT outsourcing market in EMEA is experiencing significant growth and development. Customer preferences for cost savings, access to specialized expertise, and the need to focus on core business functions are driving the demand for IT outsourcing services. Trends such as the increasing demand for cloud-based services and the growing popularity of nearshoring are shaping the market. Local special circumstances, such as a highly skilled workforce and data protection regulations, are also influencing the market. Underlying macroeconomic factors, such as the increasing globalization of business and the adoption of digital technologies, are driving the growth of the market.

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.