Outsourcing boosts European IT services

Demand for outsourcing and managed applications will help the IT services market in western Europe to grow three per cent in 2004, compared with a disappointing 2003, according to research.

Analyst IDC said that IT services spending is now growing faster than gross domestic product (GDP), as the market enjoys a recovery that is likely to continue until mid-2005.

Jamie Snowdon, European services programme research director at IDC, said in a statement: "The days when IT services grew three times as much as GDP have gone.

"Evidence shows that, in the short to medium term, a ratio of around 2:1 will become the norm."

The IT services industry is still suffering from over-investment in 1999 and during the internet bubble, IDC's research said.

While spending is up for outsourcing and application management, the consulting and systems integration markets remain depressed.

"The systems integration market is moving away from implementing killer applications towards the appliance of technology to business processes," said Snowdon.

The UK and Spanish markets are expected to be among the most dynamic in western Europe in 2004, with four and seven per cent growth respectively.

But France and Germany are still suffering, with spending growth remaining at 1.5 to two per cent.