Indian outsourcing companies could be in for some tough times. Close on the heels of reports that US orders may slow down following the sub-prime crisis, there comes a report that the economic outlook growth for the UK is worsening.

The Bank of England said in its quarterly report that signs of a thawing out of the economy were visible from the slump in property prices and companies too may postpone plans for IT-spend faced with such recessionary trends.

Both the United States and UK account for about 80 per cent of India's 64 billion dollar outsourcing business and the turmoil in the British economy could well spell further trouble to Indian IT majors who were seeking to make up for lost American business through fresh conquests in Europe.

Of late, India has become the favoured outsourcing destination for British companies who have either floated captives or taken the third-party route. It was probably the success of the UK outsourcing venture that caused Europe to follow suit.

In the first quarter of 2008, Europe accounted for as much as 38 per cent all outsourced contracts, though published media reports quotes IDC to state that UK outsourcing could well decline below the western European average in the months ahead.

"The outsourcing market in the UK has reached a high level of maturity and will consequently grow less rapidly than in the other parts of the world, the IDC has said in a recent report.