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Nordic Outsourcing market heats up

Nordic Outsourcing market heats up

While the rest of Europe and the UK languishes in recession, with one percent or even negative growth and very little outsourcing activity, the Nordics market has experienced a very healthy five to six percent growth (albeit declining quickly now) and a very healthy outsourcing market with dozens of new deals in the pipeline (several global but also nationally tied brands are going to market as we speak). The Nordic outsourcing market is over €5bn (total contract value) of which approximately 50% is in Sweden and the rest equally distributed across Denmark, Finland and Norway.

The demand for IT Outsourcing (ITO) services is larger (in contract size) than the demand for Business Process Outsourcing (BPO) services albeit the opposite is true for the number of deals going to market. Shared services and ‘white-labeling’ continue to grow for both ITO and BPO. The public sector industry and Application Development/Maintenance outsourcing services are still untapped areas compared to more mature markets.

The Nordic supplier landscape is far from consolidated, especially when looking at more mature markets like the UK and BeNeLux. Therefore it should come as no surprise that Qbranch, the Swedish ICT consulting and outsourcing company has been acquired as the vanguard for expansion.

What is surprising is the fact that the acquirer is Dutch. Imtech is seeking to dramatically grow its existing Nordic presence said Rene van der Bruggen CEO of Imtech. ICT is the third competency of the Dutch company who cited “Qbranch’s Private Cloud technology (60% of their activity)”, as fitting perfectly within the core of Imtech’s ICT strategy. The rumours of a buyer circling Qbranch have been in the Swedish market for many weeks, however most observers believed that an India offshore company was the most logical suitor. Some of the Indians’ remote management skills and lack of true cloud offerings would have made an ideal marriage. Furthermore, most offshore providers also suffer from a lack of scale and true on-site consultancy capabilities, something at the core of Qbranch’s history. At an annual turnover of only 60million Euro’s Qbranch would be merely a petty cash transaction for most Indian providers. Equally surprising is that T-systems did not figure in the contest either. Again this would have been a solid match (as they’ve publicly declared strong interest in the small to medium sized market) and would have been not only possible but logical in the under-represented Nordic market. This opportunity was equally lost on Atos (now incorporating Siemens), HCL, Infosys, TCS and others.

Prior to the acquisition news of Qbranch the Nordic market was already underrepresented by suppliers with a focus on the small to medium sized market. Only a few strong solid brands remain such as TeleComputing. Either the large dragons such as IBM and HP make a strong investment in this segment or there will be more room for smaller suppliers to grab marketshare. Whatever happens, the Nordic market is providing end-clients with more options.

Posted in Outsourcing Comments: 2 comments

 

2 Responses to Nordic Outsourcing market heats up

  1. Y5jyHId1NK says:

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  2. ywmtWHYg says:

    Intriguing point of view.

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