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On Friday, when Greece got bailed out for $172 billion, another set of people were happy – Indian IT companies.
While Greece is still not completely out of the woods, the news comes as good cheer for Indian IT companies that expect to see more outsourcing coming from the troubled zone.
While the US has been the largest geography contributing in excess of 50 per cent, Europe has been steadily growing since the last seven years – albeit at a slow pace. However, as the Euro Zone crisis reached fever pitch six months ago, concerns around business from Europe reached a zenith.
In the third quarter of the 2012 fiscal, the top Indian IT companies surprised industry watchers by posting better than expected quarterly revenues.
In the third quarter, Infosys saw significant growth in Europe as the company bagged two multi-year deals in excess of $500 million. Europe contributes 22.6 per cent to Infosys' revenues and it grew 19 per cent in calendar year 2011, according to analysts.
“We see great opportunities in this region and we will continue our investments in Europe for long-term benefits,” said Mr B.G. Srinivas, Head of Europe and Global Manufacturing, Engineering Services and Enterprise Mobility, Infosys.
Growth came from existing clients across financial services, manufacturing and retail and the company saw a jump in the number of clients and added 14 clients in the quarter.
TCS similarly added four clients in the third quarter and all of them are large multi-million dollar deals.
Interestingly, Cognizant's European revenues exceeded $1 billion in 2011, which is by far the best growth of any IT services firm in Europe. Wipro grew 12 per cent y-o-y in the third quarter.
“European corporations are working hard to become more competitive. This means cutting costs, becoming more agile, addressing growing talent shortages, and globalising their operating models. A growing number of European companies believe that offshore firms are the ideal partners for helping them achieve these business objectives,” said Mr Peter Schumacher, President & Founder, Value Leadership Group Inc.
While the logic for outsourcing or offshoring was always compelling, recent news of Greece being bailed out offers positive sentiments across the region which could result in more outsourcing deals. “This positivity is expected to be carry on for few months and we are seeing increased viability of offshoring/outsourcing,” said Mr Shashi Bhusan, Senior Research Analyst, Prabhudas Lilladher.
Indian tech majors have been investing in Continental Europe over the years, setting up development centres in Czech Republic, Poland and other countries to cater to service markets in Germany and France.
> venkatesh.ganesh@thehindu.co.in
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