The global public sector outsourcing market outpaced the private sector by 46% in the third quarter of this year, according to data released by US marketing analysis firm Information Services Group (ISG).

The combined annual contract value (ACV) of global public sector outsourcing contracts reached €7.4bn (US$10.02bn) in the third quarter, compared with €4.6bn (US$6.23bn) in the private sector.

The public sector outsourcing market now represents 56% of global outsourcing ACV according to the 3Q13 EMEA ISG Outsourcing Index, which measures outsourcing contracts with ACV of €4m (US$5.42m) or more. 

John Keppel, partner and president of ISG North Europe, said: “Despite pressure to control spending, governments can’t simply put infrastructure investments aside. Instead, they are relying increasingly on outsourcing to balance the need for efficient, localised services with the need to rein in costs.”

The data also showed that the US, the UK and Australia are the largest spenders in public sector outsourcing.

While the US is more focused on IT outsourcing (ITO), concentrating on applications, data centres and networks, the U.K. public sector is driven towards Business Process Outsourcing (BPO), with an emphasis on solutions for pensions and social security, taxation and other e-governance initiatives.

Within Europe, the vast majority of public sector contracting activity is concentrated in the UK, where the public sector outsourcing market is larger than the private sector.

In the year to date, 122 public sector outsourcing contracts have been awarded in the UK, valued at €5.1bn (US$6.91bn) in ACV.