The Hindu Business Line : Cos see more headroom for growth in Europe

Bullish on prospects
There is business to be captured, and investments now will help us ramp up in future: Infosys
France, Germany and Nordic countries are behind the curve in outsourcing work: Wipro
Some customers in Iceland are impacted by global crisis, but have not stopped projects: Sonata

Shamik Paul
Vishwanath Kulkarni

Bangalore, Oct. 24 Notwithstanding the gradual spread of economic crisis to Europe, Indian IT firms are bullish on prospects in Continental Europe that’s slowly warming up to the concepts of outsourcing and offshoring.

Indian vendors such as Infosys and Wipro see some softness in European financial services segment, but are confident about prospects in sectors such as manufacturing and retail, although there is some delay in decision making.

The US economic crisis has spread to Europe in recent weeks and claimed victims of some banks, especially in countries such as Ireland and has impacted large financial institutions such as Fortis.

“There is significant head room for growth in Europe,”said Mr B.G. Srinivas, Senior Vice-President, Executive Council Member and Head-Manufacturing, Infosys.

The company earned about a billion dollars from Europe, accounting for 28.1 per cent of its total revenues.

Post-downturn gains

The present investments in the continent would help the Indian vendors grow their capacity to meet future upswing in business after the downturn is over.

“There is business to be captured currently, and these investments will also help us ramp up in the future,” said Mr Srinivas.

Infosys, which is trying to reduce its dependence on the US, is looking to grow its revenues from Europe and from rest of the world.

Diversified offerings

Infosys believes it is well positioned with its well-diversified service offerings and continues to expand capabilities at its near-shore centres in UK, Poland, Czech Republic and Germany.

“We are seeing traction in manufacturing, communications, media and entertainment, insurance, healthcare and life services besides energy utilities and retail,” Mr Srinivas said.

Mr Girish Paranjpe, Joint Chief Executive, Wipro Technologies, said the company sees bigger potential in some markets such as France, Germany and Nordic countries that are behind the curve in outsourcing work to Indian vendors.

However, it would be 18 to 24 months before the company gets substantial business from these geographies, he added.

At present, Wipro gets 26.9 per cent of its total revenue from Europe.

Less penetrated

For the Indian vendors, the European markets are less penetrated than the US market. This gives them room to grow their market share, even though there is a slowdown in the economy, said Mr Siddharth Pai, Partner and Managing Director, TPI Advisory Services India Pvt Ltd.

The push for them to increase their market share in the continent has also contributed to their focus on Europe, he said.

Smaller firms such as Sonata Software that earns over 60 per cent of its revenues from Europe is looking to diversify its presence in Continental Europe.

“Some customers in Iceland – a bank and telecom service provider, are impacted by the crisis, but they have not stopped the projects. We are constantly engaged with them to see how their business unfolds,” said Mr B. Ramaswamy, President and Managing Director, Sonata Software.

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