IT and data services the biggest type of outsourcing in the UK.

Britain’s outsourcing industry is now almost as big as the financial services sector, generating more than Ј200 billion a year, according to new research by Oxford economics released today.

The industry accounts for 8 per cent of the UK’s total economic output.

The report, commissioned by the Business Services Association, encompasses services including information technology and data services, which is the largest contributor to Britain’s annual output.

This line of business currently employs 340,000 people and makes a net contribution to the economy of Ј24.7 billion.

The outsourcing industry is also a huge contributor to the Governments coffers, paying Ј35 billion a year in taxes – equal to 12 per cent of the total take from business and personal taxes. The outsourcing sector is now the second-biggest employer, behind retailing, accounting for 3.1 million jobs, equivalent to 10 per cent of the British workforce.

Bindi Bhullar, director of global IT services provider HCL Technologies, said:

“Successful outsourcing projects have previously been seen so as the elephant in the room. Until now, there has been a reluctance to openly discuss the core benefits outsourcing brings to the UK economy.

 It is great to finally see credible research highlighting the significance of IT and IT-related BPO into context. The industry  has clearly come a long way since the Y2K projects of the 1990s. This report shows how IT outsourcing has fully developed into a mature market.

“Thanks to this maturity, organisations now have access to new talent, advanced technologies that can deliver additional benefits, and most notably, faster time to market for new applications and upgrades alike.”

The research comes as welcome news to the outsourcing industry, which has been in the spotlight recently as a result of the governments drive to cut costs and reshape public services.