BANGALORE: As corporations in Europe's two largest economies shed inhibitions about offshoring and aggressively try to trim expenses, Indian outsourcers are scrambling to build a local front and be in the reckoning. Companies such as Infosys, Wipro, Tata Consultancy Services and HCL Technologies, for whom success in continental Europe was limited to the UK and Nordic countries so far, are now actively looking to buy service providers in France and Germany.
At least three planned acquisitions, each valued at under $50 million (Rs 270 crore) in Germany and another in France valued at a little over $100 million, are in the final stages, according to people with direct knowledge. They did not name the acquirer or the target as they are advisors to the deals and are bound by non-disclosure agreements.
"None of the Indian companies is in the top 30 list from a market share perspective in the IT services market in Germany or France," said Christophe Chalons, chief analyst and member of the board at Pierre Audoin Consultants, a French consultancy and market research firm.
"An acquisition would be the quickest route for the Indian companies to get a local workforce and client relationships," Chalons said.
Germany, France big markets
Chalons said Germany and France together represent nearly half of the European IT services market, which industry body European Information Technology Observatory pegs at about 155 billion euros, or more than Rs 10 lakh crore. Currently, local service providers such as T-Systems of Germany, Atos and Capgemini of France and Tieto Oyj of Finland as well as IBM, HP and Accenture dominate this market.
Europe contributes a little under 30% of the $76 billion in exports that the Indian IT-BPO industry is expected to clock in the year to March 2013, with most of it coming from the UK and Nordic region. Analysts agree that there is greater openness to offshoring in Europe not only due to rising sourcing maturity but also because of the prevailing profitability pressures. "Earlier, they could afford to say, 'I'm a German, and I will do business only with a German'," said a senior executive at a large Indian IT firm who did not want to be identified.
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