BPOs see their new calling

[jayanthi mandhalapu]

The $200-billion IT services market in Europe is throwing up greener pastures for major Indian software services companies as new geographies sh
ow positive traction besides the traditional market of United Kingdom.

Hitherto, UK had remained the key market for the Indian IT services majors like TCS, Infosys, Wipro—and even for Cognizant. It is estimated that more than three-fourth of these companies' revenue in Europe actually comes from UK.

However, the current economic downturn is changing the contours for these companies in Europe with non-UK countries showing better traction. According to Jens Butler, principal analyst, IT services and sourcing group, Ovum, "The downturn has impacted the UK significantly more than most of Europe (except maybe Spain) and as such, discretionary spend has been reigned back substantially—which will impact the 25%-50% growth rates they (Indian companies) have been experiencing to date."

The investments made by these IT majors in countries outside of UK like Nordics, Germany, France and Switzerland are paying rich dividends for them now. For example, TCS in its latest quarterly results reveal that the contribution from continental Europe has marginally increased while it has actually declined in the UK. In the case of Cognizant, continental Europe (non-UK) accounted for 43% of its revenue its European revenue, recording around 75% growth in 2008.

"In Europe, global sourcing of IT and BPO are relatively underpenetrated, more so in Continental Europe.... We continue to remain optimistic about the growth in Europe," said R Chandrasekaran, president and MD, Global Delivery, Cognizant.