15 July 2009 | Jake Kanter

The value of IT outsourcing deals in the UK grew by almost a third in the first half of 2009.

The value of deals signed by the 10 biggest IT outsourcing firms rose by 31 per cent in the first six months of 2009, according to a report by researchers Ovum. This was an increase of about £744 million compared with the same period last year.

The rise was driven by "mega deals", including BT's £500 million agreement with the NHS and a £685 million contract for HP-EDS with insurance firm Aviva. Smaller contracts also helped drive growth.

John O'Brien, senior analyst and author of the report, said: "The UK public sector in particular continues to let significant contracts, such as those for ID cards. However this is more a culmination of existing procurements than new deals."

Financial services and retail have also increased IT outsourcing in the first half of 2009, including Carphone Warehouse's £20 million deal with IBM.

But, the report warned, large IT companies are putting a stranglehold on the market and deals are "falling into the hands of fewer players", fuelled by mergers and acquisitions between IT companies. One example is HP's $13.9 billion (£8.5 billion) takeover of its rival EDS (Web news, 2 September 2008).

Other suppliers must offer more for less and provide greater innovation to succeed.

SMjul2009