The latest deal between 4uGroup and Tata Consultancy Services shows IT outsourcing remains big business, according to an expert.

As part of a $100 million agreement, Tata will provide managed IT services for the telecommunication enterprise, which is the holding company behind Phones 4u.

The IT outsourcing company will offer application support, maintenance and development as well as datacentre and desktop services.

Ian Brown, senior analyst at market research firm Ovum, says: “This contract demonstrates that while there is undoubtedly unrest in global markets, there is still interest and investment going into outsourcing contracts.”

He adds that IT support providers must demonstrate that they can offer high quality, competitive prices and wide-ranging skills in order to land contracts.

Last week, business advisory company EquaTerra said the business and financial case for investing in IT outsourcing is strengthening due to the economic downturn, predicting that more deals will be signed in the second half of 2009, as demand for IT support increases.