Experts predict Europe will make up a growing share of business for Indian outsourcing comapanies like TCS.
Som Mittal, president of India’s National Association of Software and Service Companies (Nasscom), recently predicted that in 2014 European companies would do more business with Indian outsourcing specialists than North American companies.
An Economic Times article quoted Mittal as saying that “latent demand” in the region would drive strong growth for Indian companies this year. “Europe is growing faster than the U.S. That is something we saw this year and this will only gain momentum,” Mittal said as 2013 drew to a close.
According to the article, Europe currently accounts for about 20 percent of India’s IT services market. While that is only about a third of the size of the North America market, which has traditionally been the biggest customer for Indian service providers, that could change as Indian companies expand their presence in Europe.
TCS, for example, purchased Alti SA, one of the top five system integrators for SAP solutions in France. TCS also announced it would open an SAP Innovation Center in France.
TCS also just inked a deal with British drinks maker Diageo, to manage Diageo’s global IT infrastructure, data centers and servers, and to provide service desk support to Diageo’s 36,000 employees in 180 countries.
In a statement, Ivan Menezes, Diageo’s chief executive officer, called the partnership with TCS “the latest milestone in our strategy to create a world-class IT service to support Diageo’s global strategy and deliver efficient growth.”
Reuters also reported on the expansion trend, citing outsourcing advisory firm NelsonHall’s belief that Indian service providers will grow their European business some 16 percent this year – more than the 12 percent growth it predicts for the U.S.
The Indian companies are making inroads. According to outsourcing advisory Pierre Audoin Consultants, TCS ranked 21st in IT services revenue from Europe, the Middle East and Africa (EMEA) in 2009, but rose to 11th at the end of 2012. Indian rivals Wipro and Infosys also saw gains.
Thus far Indian service providers have been winning business in the UK and in northern Europe, where English is widely spoken, Reuters reports, offering TCS’ five-year, $160 million contract with Scandinavian Airlines System SASSA.UL as an example.
They hope to gain business in European countries where English is less common by acquiring local service providers. In addition to TCS’ purchase of Alti, Infosys last year bought Swiss consulting firm Lodestone, and Cognizant, which employs three-quarters of its workforce in India although it is based in the U.S., acquired six small IT companies in Germany.