Executive Summary (This is a document excerpt)

Europe's established IT services firms have woken up to the reality of offshore threats, even as they struggle to recover from years of business blight. In the UK and other major European economies, a growing number of end user firms looks offshore for low-cost IT and business services. Forrester modeling shows that offshore services spending in Western Europe will grow from €1.1 billion in 2004 to more than €3.6 billion in 2009 — at a compound annual growth rate of 27%. The UK will drive 69% of that spending this year and command 76% of the spending offshore by 2009. India dominates the supply side of the European offshore services equation — taking around 80% of the total spend throughout the forecast period. But in countries like France and Germany, companies will increasingly look to other nearshore/offshore locations like Spain, the Czech Republic, Russia, and Tunisia. Overall, local services firms in Western Europe will face a debilitating erosion of their growth opportunities by offshore competition. Worst hit will be UK-based application development specialists, which face having almost half of the growth in their market between now and 2009 whittled away by work moving overseas.

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