2012 represented a poor year for IT outsourcing with contract numbers falling to levels not seen since 2002 with reduced activity in the market resulting from global economic uncertainty.

In a report by analyst firm Ovum, IT outsourcing activity in the last 3 months fell well below the levels seen in 2011, with reduced contract value alongside fewer contracts available for tender.

According to the analysts, the value of IT outsourcing in the fourth quarter of 2012 fell by 34 percent compared to the previous year.

The services sector saw the largest decline, with the number of deals up for tender failing by around 50 percent, with major markets including both North America and Europe seeing dramatic slumps.

Ovum analyst Ed Thomas, said: “public sector activity has reduced as many governments come under pressure to cut public spending in the face of high debt levels, leading to a general reluctance to get involved in large-scale IT services deals.”