The 37 percent growth of IT outsourcing in 2004 were driven by an increase in the number of smaller contracts and vendor competition. Statistics in the IT Services Contract Tracker (researched by Datamonitor and Everest Group) showed that the combined value of outsourcing deals in 2004 amounted to $163 billion.

The report recorded 1,814 deals in 2004 -- a 4.4 percent increase compared to 2003. IBM Global Services had a 10.7 percent share becoming the market leader last year. But even with IBM's leadership, "the top ten vendors accounted for only 57 percent of the total market compared to 68 percent in 2003." 2004 had increased competition from new IT service vendors as the number of multi-billion dollar deals decreased and mid-size contracts increased.

Michel Janssen, president of supplier solutions at Everest Group said that the traditional 'big six' IT outsourcing firms are coming under pressure from smaller players and the offshore outsourcing companies.

He added, "Looking further down the road, we are also seeing the top tier offshore vendors such as TCS, Infosys, and Wipro compete, and win, in head-to-head deals against top tier Western vendors - and the wins are increasingly larger in size."