“No one can ever say that they are efficient,” says Mr A.S. Lakshminarayanan, the soft-spoken head of Tata Consultancy Services' (TCS) European operations. “If they say that they are, they are certainly not efficient.”

Efficiency drives “whether by the private or public sector” had been the staple of outsourcing firms as the financial crisis whittled away at profits of businesses and the revenue sources for governments.

Now, Mr Lakshminarayanan says European clients are out of the defensive mode, despite the economic crisis continuing to loom over southern Europe, and uncertainty persisting in economies such as the UK.

‘Planning for growth'

“What we hear from businesses is that while people have an eye on the macroeconomic situation, whether its unrest in the Middle East or the sovereign debt crisis, businesses are not planning for crisis but planning for growth,” he said, in a recent meeting at the company's offices in London.

Pricing pressure has also eased off, he says, reflecting clients' quest for value, rather than budget slashing.

Businesses are in a positive frame of mind. Efficiency will never go out of fashion, but they want to see how they can improve their market share, improve products, get closer to the customer, and what new models they should be looking at.

As a result, TCS has seen demand for services, such as enterprise solutions, increasing.

With Government work forming a small proportion of the company's work in the UK (It does not work on public sector contracts on the continent.), the company insists that any work that does land on its table in this area will be an upside, leaving it less vulnerable to the fiscal problems that plague many of the region's economies.

Back in March, TCS reported 24.3 per cent growth in net profits, driven by the US and Europe (In Britain alone revenues rose some 25 per cent.), and Mr Lakshminarayanan expects the company to continue to grow in the year ahead, raising headcount in Europe.

While Britain will remain TCS' key market (It is currently the second largest after the US, with 24 of the FTSE-100 companies as its clients.), Mr Lakshminarayanan says there will be an inordinate focus on countries such as Germany, where TCS has built up a solid base of German speakers. “In Germany, we are ahead of the curve, we have a critical mass of people who are well integrated with the delivery model,” he says.

The model there proven, the challenge ahead will be to scale it.

In France, where the company began operations some 18 months ago, it's a different matter.

“We have put in a lot of people, but it continues to be a difficult market,” he says, citing the language barrier, and a cultural preference in the country for working with local firms as some of the barriers.

“It's not that we don't have the presence, we need to get the model right and then scale.” TCS will remain in its southern European markets such as Greece, Spain and Italy, though growth in those markets will not be the priority.

“We have specific clients we are targeting and will be making investments towards those clients, but it's not about an investment in the market.”

For the moment, the company isn't focused on acquisitions in Europe, says Mr Lakshminarayanan.

“From a company point of view, we want to grow organically, though if the right set of opportunities presents themselves we would look at that too.”

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