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"...outsourcing will make inroads in markets like France, Italy, and Spain that have generally shown only limited interest."

Outsourcing in those areas will likely grow due to the current economy. Those are regions that have traditionally resisted the outsourcing model.
I\Yes there's a resistance for outsourcing front in there from European markets
I am not convinced about this assertion. I am not sure that there is political support in european countries to create more unemployed. Outsourcing economics are based on reducing headcount and labour arbitrage - not a good combination in countries that are trying to get more people working.
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Great gods TR, why do you continue to give forums to these "people" who think outsourcing is one of the solutions to every budgetary problem? Honestly I think there is a potent argument to make that converting contractors to full-time employees will contribute far more to the bottom line than continue the "Chainsaw Al" mentality.

Frankly, the CIO should be looking first at his currently outsourced operations for where to save. What projects are coming to completion? Is the maintenance phase easily handled in-house by current staff? What projects are already behind and over-budget, and what needs to be done to recoup those penalties from the contractor company?

To me the second big place to look will be hardware, software, and licensing budgets. What software is out-of-date, unused, etc? Can you get a better deal on licensing fees on software? What hardware investments can we make that will not only eliminate redundant underused systems but also reduce warranty, utility, and other datacenter costs? Etc etc.
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