Sweden, France and Germany were the strongest outsourcing markets outside of the US during the first quarter of 2010, surpassing the UK for the first time, according to outsourcing advisory firm TPI.

The TPI Index, which measures commercial outsourcing contracts valued at €20 million or more, recorded just of €7 billion in total contract value (TCV) during the first three months of 2010, up 7 percent over the corresponding 2009 period.

Sweden more than doubled its full-year 209 TCV with one single mega-deal, which accounted for more than 14 percent of the global market's TCV for the quarter.

France, meanwhile saw almost €2 billion in TCV awarded, making it the world's third largest marketing in the first quarter of 2010, again due largely to a mega-deal, in this case awarded by French railways company SNCF.

But while Germany exceeded €1 billion in TCV during 1Q2010, the country also experienced a drop in global market share. And the UK, historically Europe's strongest and most mature outsourcing market, saw a decline of almost 50 percent year-over-year, to less than €800 million.

“Even though this is only one quarter’s results, it does appear that the key countries contributing to Europe’s outsourcing performance are shifting to the less mature Continental markets,” said Duncan Aitchison, Partner and President of TPI for EMEA.

By industry sector, the Travel, Transportation and Hospitality vertical accounted for one of only two increases in the quarter. With a TCV of €2.7 billion, it nearly quadrupled year-over-year due to the mega-deal awarded by SNCF in France, making it the number one industry vertical in the quarter. The Financial Services sector came in second with a TCV of €2.4 billion, a decline of 23 percent. The Business Services sector increased its TCV by 400 percent to €500 million, also due to a mega-deal, tying it for fourth place with the Telecom and Media sector. Manufacturing TCV fell 29 percent year-on-year.

“Looking forward, the number of contracts coming up for renewal has increased year-over-year and we believe these will continue to flow into the industry pipeline throughout the coming months,” Aitchison said. “In later quarters, we expect to see the market continue to recover at a slow and uneven pace, with a steady flow of new opportunities and an increase in new scope activity in the industry pipeline.”