Home : Networking : News

Europe key target for Indian offshore growth

Outsourcing providers in continental Europe face stiff competition from Indian players who are eyeing up the same chunk of business, warns analyst Gartner.

By Maggie Holland, 17 Apr 2007 at 12:56

gallery

Businesses in continental Europe have now woken up to the benefits of global outsourcing deals and are starting to follow the leads set by the UK and US in their fondness for offshore outsourcing.

Indian service providers in particular have recognised this new interest and have set their sights on these geographies as key areas for growth, according to Gartner which is discussing the pros and cons of the global delivery of IT at its Outsourcing and IT Services Summit in London this week.

As a result, these Indian players pose a real challenge to European offshore outsourcing companies also vying for that business, claims the analyst.

To avoid losing out to this new breed of competition, Gartner says that continental European service providers should revamp their strategies to encompass global delivery and service industrialisation.

The last few months of 2006 saw some strong financial results from the Indian offshore market, demonstrating particular revenue growth in Europe. Infosys, TCS and Wipro, for example, have reported year-on-year growth of more than 40 per cent, while Cognizant has experienced an even higher growth rate of 60 per cent, according to Claudio Da Rold from Gartner's IT sourcing group.

But, some issues must be resolved before Indian companies can truly compete on a level playing field.

"These Indian offshore providers are recruiting staff in the European markets they sell into; not just sales staff, but consultants, project managers, engagement managers and, in some cases, personnel to staff their new near shore delivery centres," said Ian Marriott, vice president of research for Gartner's IT sourcing group.

"However, Indian service providers must tread cautiously and first deal with further challenges before they can compete on an equal footing with the major traditional providers."

One of the three biggest challenges ahead, according to Gartner, is the fact that many European businesses are drawn towards providers that have already dedicated their commitment to this region.

To overcome this barrier, Indian operators must increase local recruitment activity and work at building increased trust and confidence.