Demand for outsourcing in Europe has increased dramatically in the first half of 2007, compared with the same period of last year, according to the latest Quarterly Index from sourcing advisers TPI.

The total value of new – as opposed to renewed or restructured – outsourcing contracts in the €40 million (£27.06m) plus bracket is up 78% on 2006.

This €12.3 billion (£8.32bn) of new business represents a significant recovery from the relatively soft outsourcing market experienced in Europe last year. Europe’s record on new deals accounts for over half – 54% – of all new outsourcing deals signed globally, this year.

“Continental European countries have been relatively slow to adopt outsourcing, which makes it a market with huge growth potential. Five years ago, the region accounted for only 12% of global outsourcing activity. Now Continental Europe has nearly trebled its share to 30%,” said Duncan Aitchison, managing director of TPI.

Europe’s buoyancy has been driven by a concentration of “mega deals” in the region. These deals, worth in excess of €800,000m (£541,000m), represent 44% of new business to hit the European outsourcing market so far in 2007. Of the €7.8bn (£5.3) in mega deals awarded this year, over two-thirds have been in Europe.