Information Services Group, a leading technology insights, market intelligence and advisory services company, has released data showing a surge of large contracts in the fourth quarter lifted the outsourcing market in Europe, the Middle East & Africa (EMEA) to a record performance for 2011.

The 4Q11 EMEA TPI Index, which measures contracts valued at €20 million or more, found fourth-quarter total contract value (TCV) in the region reached €13.4 million, an increase of 17 percent from the fourth quarter of 2010 and 12 percent from the third quarter of 2011. Four of the global market’s five fourth-quarter mega-deals – contracts valued at €800 million or more – were awarded in EMEA.

For the year, the region recorded TCV of €44 billion, an all-time high and an increase of 27 percent on 2010. The number of contracts awarded also set a record, mirroring a trend in the other regions of the world. Globally, EMEA accounted for more than 60 percent of the market’s value, half of all contracts awarded and eight of the ten mega-deals signed.

“This region had a substantial impact on the performance of the global market both in the fourth quarter and in 2011,” said Duncan Aitchison, Partner & President, ISG North Europe. “The growth we saw was largely the result of significant mega-deal activity as well as large contract awards in the historically less robust outsourcing markets, particularly France, Southern Europe and the Middle East.”

The TPI Index, presented by ISG, provides a quarterly snapshot of the sourcing industry for clients, service providers, analysts and the media. Now in its 37th consecutive quarter, it is the industry's authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider metrics.

The 4Q11 EMEA TPI Index recorded a return of demand in the private sector in the United Kingdom, which saw a 15 percent increase in contract numbers year-on-year and 40 percent in TCV.

By scope, IT outsourcing (ITO) and business process outsourcing (BPO) both recorded their highest-ever TCV and contracting activity in the region in 2011. ITO TCV grew for the third consecutive year, reaching €31 billion, while BPO TCV more than doubled to €13 billion on the strength of three mega-deals. The number of BPO contracts awarded in 2011 increased by 37 percent compared to the previous year.

All of the major industry groups in the region performed strongly in 2011. Financial Services saw its best year ever in EMEA, both in terms of contract signings and value, recording a TCV €13.4 billion. Manufacturing TCV of $13.2 billion was also near its high-water mark.

“Looking at the year ahead, it seems likely that the EMEA market will maintain its pace in terms of numbers of contracts but may find it challenging to match its 2011TCV, which was buoyed by exceptionally large transactions,” Aitchison said. “The economic volatility in Europe and continuing uncertainties surrounding the euro, however, could still change profoundly the shape and scale of outsourcing demand in the region.”