British-based software companies were able to generate more than double the turnover of rivals in Germany and France, according to a European software survey released this week.

In the report compiled by the European Software Association with PricewaterhouseCoopers (PwC), the worldwide turnover of British companies in the sector was £11.5 billion.

Head of software and IT at PwC Jass Sarai said the UK's strength lay mainly in smaller companies on the top 200.

Mr Sarai continued: "These are challenging times for the UK software industry. The companies that seize the opportunities provided by technological shifts, which innovate and remain agile, will emerge stronger as the market reshapes itself."

It was also found that European companies represented 31 per cent of the overall worldwide software market, with the US taking the lion's share with 49 per cent and Asia taking the remaining 20 per cent.

PwC employs 155,000 people worldwide in 150 countries over 22 industry-specialised practices.

In a recent survey of SMEs for Connect, the two most important benefits of outsourcing were guaranteed response times and allowing in-house IT staff to concentrate on more strategic issues.