European IT/Telecom Converged Service Delivery Outsourcing Deals: H2 2006

During the second half of 2006, the European market for converged service delivery (CSD) showed sustainable momentum. IT service providers and telecom service providers across Europe signed 59 deals that bundled elements of telecom and IT services delivery in one contract. Although the majority of the deals tended to be for less than five years and for less than €50 million, we also found two megadeals for more than €1 billion. Germany, the UK, and the Netherlands represented the most active CSD markets, while firms from the manufacturing and business services industries showed the highest propensity to sign CSD contracts. Although service demand centered around WAN data services and IT infrastructure management, we also noted the growing complexity of some CSD deals. While this trend points to growing client maturity and provider sophistication around CSD, we are yet to see true CSD deals that provide the end-to-end management of combined telecom services and IT services under a single service-level agreement (SLA).