IT outsourcing is booming in Europe, according to a report from contract IT advisors EquaTerra. 

Demand for outsourcing rose 50 per cent in EMEA from April to June 2007, compared to a 37 per cent increase globally.

European organisations are also buying larger contracts, accounting for 60 per cent of publicly announced deals over $50m.

The public sector is still a rich market for outsourcing on both sides of the Atlantic, illustrated by a $20bn deal between the US General Services Administration and a consortium headed by Verizon and CSC, and a €1.3bn contract between the Italian Central Government and AlmavivA Group. 

However, the penchant for mega-deals may be against the global trend. EquaTerra's second-quarter report shows an upsurge in business processing outsourcing (BPO) deals of $1m to $10m in value, which rarely make the press.

BPO contracts are often in unusual areas, such as knowledge processes, engineering, R&D, document services, facilities management, logistics services, data analytics and legal processes.

BPO is a sellers' market, according to the report, especially human resources BPO.

All is not rosy for the IT outsourcing market, however, as the report highlights "capacity constraints" mostly in the form of skilled staff.

Outsourcing suppliers lack staff capable of organising and delivering the service, and customers lack those capable of managing and monitoring the compliance aspects.