 With the recent recession in US economy, the Indian companies are all set to switch over its sales concentration from the US to Europe owing to the over – dependence on US customers. Companies are heading towards huge sales target of millions in Europe that has been set for the next few years of operations in Europe.
And now, the most recent development in the Axon acquisition story has exposed yet another Indian player, HCL into the league of companies eyeing the virgin European markets.
Gone are the golden days of IT and the outsourcing sector in India. The last decade revolutionized the Indian economy and most of that came from the booming IT industry. The problems were executed efficiently; especially the employment concerns were largely addressed. Employment improved remarkably with the creation of a huge number of jobs in BPOs and IT companies.
And that may be the possible reason why software and outsourcing majors like Tata Consultancy services (TCS), Wipro, Infosys and Satyam have started to steer away their cars towards European markets.
But it has changed and changed drastically over the past few months. The main reason is undoubtedly the US recession, due to which many outsourcing players in India are going through quite a tough phase. Job cuts in almost every big IT concerns signify that a decade long honeymoon period for the IT and BPO professionals is definitely going for a toss now. Factors like job security, cost-cutting measures and review of the talent-pool will certainly sadden the techies who were on a high over a considerable period of time.
Growth mushrooming in Europe
There's no more dependence on the US, is the mantra among the different constituencies of the Indian IT and outsourcing industries.
And that may be the possible reason why software and outsourcing majors like Tata Consultancy services (TCS), Wipro, Infosys and Satyam have started to steer away their cars towards European markets to further mushroom their growth which has been slightly affected with US recession.
Satyam has generated some $440 million that accounts for a 21% of its revenue in Europe last year.
Infosys and Tata Consultancy Services (TCS) - are also on song in Europe as the market going down in US. Last year, TCS had recorded a whopping 29 percent of revenue in Europe followed by Infosys’ 27 percent.
The senior vice president and Europe sales head of Satyam, Peter Heij revealing the company’s plans to boost the revenue in Europe to 25% by the end of 2011. Heji further added saying said the Indian software player is going for big contracts in Europe as well as acquiring new projects from existing clients. Some of its major clients in Europe are Airbus maker European Aeronautic Defence and Space and ArcelorMittal.
The Role of Bodies
The IT and BPO trade body, Nasscom has also raised concerns. Nasscom has recently partnered with a Dutch body called Centre for the Promotion of Imports from Developing Countries (CBI) to facilitate trade with European countries
This programme is targeted for the companies looking to augment presence in Europe. Currently, NASSCOM and CBI are inviting applications for consultants, for a ‘train the trainer program’ which is being planned as a precursor to the Export Development Program to help the Indian SME companies to help them become European Union (EU) export ready.
The framework for the export development program is to focus on the enhancements of exports to the EU by SME’s in the services industry.
Way back in 2006, a memorandum of understanding was signed between two organisations with an aim that these organisations would work as knowledge centres to fulfill the EU business outsourcing demands.
Present Status
Indian IT services players have covered over 30% of the total global market share. IT exports from India are expected to reach $80 billion within three years effectively doubling from $40 billion achieved in 2007-08. The revenue is expected to grow at a consistent compound annual growth rate (CAGR) in the non-English speaking nations in Western European countries like Germany, Italy and France. This will also pave the way for the Indian players to think beyond US. The booming sectors like telecommunications, financial services, public sector, utility services and manufacturing will be the key verticals to concentrate on.
IT exports to Europe stood at $6.63 billion with UK being the largest market. Germany, Italy and France cumulatively can get a good chunk of contracts for Indian IT industry. Now, with HCL and Infosys fighting it out for UK based Axon, things look grim if India turns back to the US. X
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