UK firms will spend 15 percent of their IT services budgets on offshore outsourcing within the next five years, according to recent predictions by analyst firm Forrester.

Forrester said European firms will spend more than EUR3.6bn (£2.4bn) on offshore outsourcing by 2009, and a quarter of this money will come from UK firms.

Forrester estimates offshore service providers will account for over 10 percent of growth in the European services market within five years, and 15 percent in the UK.

As the move offshore accelerates, local service providers will suffer, said the firm. This could lead to better deals for those opting to stay with local providers.

Forrester estimates half of offshore spending will be on application development, which could reduce the number of UK jobs for application developers.