A flurry of recent contract awards has highlighted the aggressive outsourcing activity in the UK life & pensions sector. More than Ј5.2bn of IT and business process outsourcing contracts deals have been signed in the last couple of years, but a new report from Pierre Audoin Consultants (PAC) has found that this segment is far from saturated and new opportunities will arise for both new and incumbent outsourcing suppliers.

London – April 24, 2009 – The life and pensions (L&P) market has contributed significant growth in the last few years and has been one of the most dynamic segments for outsourcing providers in recent quarters.

BPO has been a major area of activity, accounting for just under two thirds of the Ј5.2bn worth of deals signed since 2007. The trend today is for insurers to outsource books of at least four million policies. But despite the number of major BPO deals in this area, PAC estimates that about two-thirds of UK L&P open and closed book policies are still maintained in-house.

Insurers are also reappraising their approach to how they source and manage their IT infrastructure, and there have been some major contract awards in this area in recent months such as Aviva’s Ј700m deal with EDS for the management of its data centres and IBM’s win with Friends Provident. PAC expects further deals to follow with a focus on desktop, data center and applications management.

Recent Major L&P Deals in the UK

Source: PAC Deal Tracker, April 2009

One interesting feature of the recent deals signed was the contracts’ ten-year or more duration, and PAC expect insurers to be more willing to spread the cost of the engagement over as long a term as possible. Although sales cycles have lengthened and IT investment decisions are being delayed, L&P companies will continue to invest in outsourcing engagements that can deliver a clear, short-term return on investment. The changing business climate has encouraged insurers to reassess the strategic importance of their IT and business processes and look at how third party companies can help drive cost efficiencies and performance improvements.

About Pierre Audoin Consultants (PAC): PAC is a global market research and strategic consulting firm for the Software and IT Services Industry (SITSI). PAC helps IT vendors, CIOs, consultancies and investment firms by delivering analysis and advice to address a range of growth, technology, financial and operational issues.

Our 30+-year heritage in Europe – combined with our US presence and worldwide resources – forms the foundation of our ability to deliver in-depth knowledge of local IT markets, anywhere. We employ structured methodologies – undertaking thousands of annual face-to-face interviews on both the buy and sell side of the market, as well as a bottom-up, top-down approach – to leverage our research effectively.

PAC publishes a wide range of off-the-shelf and customized market reports – including our best-selling SITSI® program – in addition to our suite of strategic consulting and market planning services. Over 160 professionals in 16 offices – across all continents – are delivering the insight that can make a difference to your business.

For more information, please visit our website at www.pac-online.com

For more information on the article, please contact:

Rajeena Brar,
Tel: +44 (0)20 7553 3963
r.brar@pac-online.com

Press Contact:
Shelly Wills
Tel: +44 (0)20 7553 3965
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