Europe is now the world's leading market for new outsourcing contracts, according to research from international sourcing advisory firm TPI.

TPI's latest Quarterly Index found that in 2004 Europe represented 49% of the value of major outsourcing contracts (worth more than £28m) behind the US at 44% and Asia Pacific at 7%.

In total European outsourcing contracts came to £19.6bn - double the amount in 2002.

Duncan Aitchison, international managing director at TPI, said that there had been no reduction in American contracts. "European companies realise that they cannot continue to compete effectively on a global scale without using the increased efficiency and flexibility they can gain through outsourcing," he said.

He added that he expected European outsourcing contracts to continue to grow this year.

IT remains the main avenue for outsourcing, accounting for 70% of the 40.7bn major global outsourcing contracts TBI said were awarded last year reached.

Business process outsourcing – including services such as finance and accounting, procurement, customer relationship management and HR processing - accounted for the rest.