More IT firms are expected to outsource work this year as they strive to reduce overheads in the current economic conditions, according to new data.

Research by TPI shows a 20 per cent rise in the value of overall outsourcing contracts during the first three months of 2008. Forecasts suggest the industry will continue to expand at a similar rate over the short-term.

Peter Allen, partner and managing director, said: "All and all, the picture of the prior six months was very robust and indicates momentum in the broader market that we haven't seen in years."

Analysts Forrester Research found that UK firms sealed IT outsourcing deals worth £3.8 billion last year, which was the highest in a fast-growing European market.

The £1 billion year-on-year increase was reflected by British companies contributing almost half of the deals listed across the continent, which now comprises over 50 per cent of the global outsourcing sector.