The Hindu Business Line : European cos plan to increase offshoring assets: IDC

In a bid to thwart the looming threat from offshore-based and global IT service companies, European service providers plan to increase offshore assets in locations including India, Eastern Europe, and South America, by 65 per cent during 2006, according to a latest study.

"European service providers are quickly building up offshore capabilities. Large and medium-sized European service providers have already established themselves in a number of offshore locations such as India, Eastern Europe, and South America, to compete with offshore-based and global service providers such as TCS, Wipro, IBM, and Accenture - and plan to increase their offshore assets by 65 per cent during 2006," a latest IDC study said.

It said that while European service providers still had a lower share of their workforce offshore than their US and Asian counterparts, the picture was changing fast.

Strategic approach

While some customers still remained somewhat wary of offshoring, service providers have taken a strategic approach and

are increasing their offshore presence now to stay in touch with their competitors, it said.

"The European business community is part of the global economy and it would be strange if it did not expect its own suppliers to be global. The financial sector, manufacturing, and utilities, lead the way," Ms Mette Ahorlu, senior analyst at IDC's European services group, said.

"European service providers have been quick to see the way ahead and we believe that their ability to combine their intimate understanding of local European markets and customers with a global delivery model will give them a competitive advantage."

No threat

Offshoring was expected to pose a threat to the European players because their size made it difficult to establish themselves offshore, but instead it may turn out to strengthen their competitive position, she added.

IDC further said that offshoring would not only impact the high end of the market.

Typically, a project should be worth $50,000-100,000 before the cheaper labour prices outweigh the increased project management cost of involving offshore resources.

This is a normal project size for medium-sized enterprises, and the core area of operation for local and regional European service providers.

More Stories on : Off-shore Development | Trends

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Inflation rises to 3.96 pc on higher energy prices

Birla-Lodha tussle: Calcutta HC appoints four administrators

Bring back long-term capital gains tax: CPI(M)

SBI net rises marginally in 2005-06 at Rs 4,407 cr

Tata Motors clocks 18 pc growth in Q4 net, to pay Rs 13

The bear party continues

Broking firms stop fresh buying by clients

European cos plan to increase offshoring assets: IDC

Siemens in pact with Huawei-3Com