Irish and UK companies are in danger of losing the advantages of outsourcing by failing to reinvest savings in IT solutions, according to a report by Capgemini.

While companies see the benefits of outsourcing, they are too focused on cost-cutting rather than improving their business, the survey, released yesterday, showed. According to Andrew Taylor, vice-president of Capgemini Consulting, the main problem is that companies have not learnt how to reinvest the money back into their business.

"It's vital to take money saved from outsourcing and re-invigorate the business, otherwise UK and Irish plcs will lose a massive opportunity to capitalise on their leadership position," he said.

Currently, Irish and UK companies outsource about 8 per cent of their IT operations, considerably more than the European average of 2 per cent.