The Hindu Business Line : Advantage MNCs in Europe

‘The MNCs use layers of offshoring as against the Indian vendors’ strategy of transferring a large chunk of work offshore directly. Also, Indian companies focus on particular countries rather than on pan-European demand’.

Our Bureau

Bangalore, Nov. 18 MNC IT firms such as Accenture and IBM are better placed to bag a lion’s share of contracts from Europe while their Indian counterparts can expect only ramp-ups from existing clients, says research firm Forrester.

“Very few companies from Europe are entering India,” said Mr Sudin Apte, Principal Analyst at Forrester Research, while stating that customers in Europe prefer to work with vendors who have strong near-shore capabilities.

“Though Europe was a good opportunity, it is not getting realised by the traditional offshore sales strategy. Culturally fit providers have a chance to succeed,” Mr Apte said.

No sizeable presence

While the MNCs have scaled both onsite and offshore capabilities, the Indian vendors do not have a sizeable presence in the region. Accenture and IBM entered the European markets eight to ten years ago and their investment in the region is much more than that of their Indian counterparts. They have invested in local recruitment and delivery centres and have a big network of near-shore centres.

Also important is the kind of services that are being offered from the near-shore locations. European clients prefer to work with vendors with the near-shore centres acting as knowledge transfer and work transitioning centres, said Mr Apte.

“The MNCs use layers of offshoring as against the Indian vendors’ strategy of transferring a large chunk of work offshore directly,” he said. Also, Indian companies are focussing on particular countries rather than focussing on pan-European demand.

Must change strategy

Unless the Indian firms change their strategy towards Europe, they would have to struggle for about two to three years, Mr Apte said, adding, “they should forget their margin game and India centricity.”

Further, the European centres of the Indian vendors should have more empowerment and decision-making capability. They should also have a broad pan-European strategy, Mr Apte said.

“Many European companies said Indian vendors are rushing to grow, and not giving them time to build the comfort level in Europe,” said Mr Apte, referring to his recent conversations with the clients. Language skills and local recruitment policy is mistaken for the cultural comfort by Indian vendors.

The issue of building comfort levelis not happening as the Indian vendors are in a hurry to grab larger business in a short time. Companies which have a combination of near-shore, onsite and offshore would succeed, Mr Apte added.

Indian IT and BPO services exports to Europe for fiscal 2009 were $14 billion. The UK accounted for approximately $9 billion, while Continental Europe and Nordic countries $5 billion.

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