New figures from International Data Corp predict that the outsourcing market in Western Europe should grow to a massive $33.1bn in Western Europe by the year 2001, if current trends continue. At the moment the Western European market is said to be worth $22.7bn, representing a quarter of the total worldwide market for outsourcers. Four out of the top ten providers are European companies. Growth has been fueled by continuing public sector budget cuts, globalization and deregulation. EDS Corp, an early entrant into the European market, retains the top spot with its infamously aggressive sales force, who most recently won a prized contract with the UK’s Inland Revenue. Cap Gemini Sogeti SA, last week awarded the 400m pound British Steel contract, was listed as the top European outsourcer. Andersen Consulting emerged as market leader in the Business Process Outsourcing sector, an area with an expected growth rate of 26% over the next five years. Business Process outsourcing covers areas such as billing, accounting, human resources, logistics and customer service. It moves organizations one step nearer towards becoming virtual companies, organizations with no internal machinery. However, as competition intensifies, outsourcers are finding that their margins are being squeezed and profits threatened by the introduction of new risk / reward clauses in their contracts.
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