As I write the credit crunch seems to be tipping over into a near-global recession, with perhaps only China and – ironically – Iraq escaping the worst of its effects. In China growth has fallen by 40%, but that is from several years of double-digit expansion.

Despite all this, business process outsourcing (BPO) analysts NelsonHall says that BPO total contract value (TCV) has grown by 28 percent in the past twelve months.

While Q2 2008 was less profitable year on year, there was an overall 13 percent increase in contract signings in commercial and civil government sectors for the first 9 months of 2008, says the company.

Other findings were also mixed. The number of new BPO contracts has declined, but BPO contracts valued at over $100 million have increased in number, while the average value of the top 20-50 deals has increased by over one third, partly driven by large deals in the insurance sector.

BPO contract value in emerging economies has grown faster, at 31 percent, than the BPO contract value in mature economies (28 percent). However, while BPO is becoming increasingly important to support domestic activity in growth markets, it remains a small portion of overall BPO activity.

The two sectors that usually dominate new contract activity, financial services and government, have increased their share of TCV from 62 percent to 72 percent. Unsurprisingly, government BPO activity in both the US and the UK has overtaken the financial services sector, where insurance remains a strong growth area, but banking BPO has fallen off significantly.

At the moment, the banking sector needs more dramatic remedies than BPO can provide,says NelsonHall. However, BPO is likely to be an increasing part of the solution in the medium-term.

Elsewhere, the telecom sector has been very active in BPO recently and activity is up in both transportation and healthcare.

The manufacturing and retail sectors have recently seen lower levels of BPO activity. These sectors, like the banking sector, face some immediate rethinking of their wider strategies but, similarly, are likely to turn to greater use of BPO in the medium term.