The Hindu Business Line : European vendors trail in low-cost offshoring

The harsh fact is that none of the European firms can claim true market leadership in global delivery when compared with best-in-class Indian service providers.

New Delhi June 4 Europe-based IT service providers including Capgemini and Atos Origin are yet to catch up with global peers such as IBM and Accenture as well as Indian market leaders in the low-cost service delivery game, despite their recent stance on buyouts to sharpen offshore edge.

"With its acquisition of Kanbay, Capgemini has stepped ahead of the European pack, but global players and Indian market leaders all maintain a significant global delivery lead over Capgemini — and more so over other Europe-based providers," said a latest Forrester report.

The report — which stacked up Europe-based IT service specialists on parameters such as scale and scope of global delivery activity, depth and capacity of global services portfolio, and maturity of global delivery processes — noted that combined offshore strength of leading vendors including Atos Origin, Capgemini, LogicaCMG, SIS and T-Systems stood at about 29,600 professionals and projected to increase to over 36,000 by year-end.

"The harsh fact is that none of the European firms can claim true market leadership in global delivery when compared with best-in-class Indian service providers. What's more, they still fall as much as two or three years behind the leading US-based firms such as IBM and Accenture, which have significant employee strength in their low-cost GDM locations," Forrester said.

Earlier this year, French IT services giant Capgemini had acquired Kanbay at $1.25 billion, making India its second largest employee base (14,000 of total headcount located in India). French computer services consultant Atos Origin too has talked of scaling-up India operations from about 1,500 professionals to 5,000 over the next three years. It had also evinced interest in acquisition of small and medium-sized IT players in India.

"The European market has traditionally been conservative when it comes to low-cost offshoring. But the scenario is changing now as companies sense advantages of global delivery model," Mr Ambarish Dasgupta, Executive Director of PWC said.

Forrester said that European providers' global delivery innovation remained in the "starting blocks" with few large, complex projects moving offshore and limited innovation being driven out of the new low-cost locations.

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European vendors trail in low-cost offshoring