IT services in Western Europe will grow 4.6 per cent to $243bn (£122bn) over the next four years, according to research group IDC.

But the market grew 6.4 per cent in 2007, hitting £96bn and growth is now set to slow.

Outsourcing will play a lead role in this market, said Laura Converso, research manager, IDC's European Services Research.

"As the European economy cools down, the outsourcing segment continues to be the growth engine of the IT services market," she said.

"The overall outsourcing market will exceed the size of project-based services by 2008 and will account for 42% of the total IT services market by 2012."

"At a worldwide level, IDC estimates that Western Europe will eclipse the U.S. to become the largest geographic market for IT outsourcing by 2009."

IDC doubts the credit crunch will affect Europe as badly as the U.S, but the uncertainty will reduce new contract signings.

The UK, France and Italy are expected to grow below the Western European average, which will be exceeded by Germany and Spain.