European software companies invested E3.3bn (£2.4bn) in research and development (R&D) last year, 63 per cent more than in the previous 12 months.

The sector employs 38,000 people in R&D and is playing a key role in creating new highly-skilled jobs, according the annual survey of Europe's top 100 suppliers put together by private equity firm Truffle Capital and French industry group Syntec informatique.

The order of the top four positions - SAP, Sage, Dassault Systems and Business Objects - remains unchanged. But the UK's Autonomy Corporation was named Europe’s best-performing software company, moving up the rankings from 44th to 15th place.

Europe's software industry is reversing the “brain drain” of the last decade, according to Truffle Capital general partner Bernard-Louis Roques.

“This is excellent news for European economies, which will profit greatly by increased employment throughout the software industry,” he said.

The region is in a strong position despite predatory activity by US firms, said Syntec informatique vice president Jean-Pierre Brulard.

“With E22bn (£16bn) in revenues, up 6.6 percent despite significant acquisitions by US companies, and E2.8bn (£2bn) in profits, the scorecard shows that the European software industry need not be modest about its position in the world economy,” he said.