The total contract value (TCV) of new deals hit an eight year low at just $19 billion (£11.8 billion), while the number of deals recorded fell for the fourth consecutive quarter, to 384 - down more than 20 per cent on the second quarter of 2010.

Author of the report Ed Thomas, commented, "After a disappointing start to the year, things went from bad to worse in the second quarter of 2011 with this very weak performance in contract signings.

"In previous quarters, the buoyancy of the public sector outsourcing market has gone some way toward offsetting the lacklustre returns from enterprise clients. However, on this occasion government spending on IT services projects also took a hit, with a notable lack of large-scale projects on offer."

Thomas highlighted the lack of mega deals - valued at $1 billion or more - as well as the squeeze on public sector spending as factors depressing the market.

Enterprise spending on IT services was hit hard in North America with private sector TCV accounting for just 15.5 per cent of the global market in the first half of 2011, compared with the 39 per cent it held for the first six months of 2010. .