Europe - Harsh Territory for Indian Outsourcers

According to a report by Forrester Group, Indian outsourcers are finding it difficult to do business in Europe amid the recession. The move to shift to European clients was an attempt to offset losses stemming from dwindling demand in the U.S.

PCWorld reported that this strategy has not been working for Indian suppliers. The competition in Europe is particularly rough since, European players like Capgemini have a strong presence there. Moreover, Indian outsourcers have not invested enough in Europe to have their staff work on client premises. In other words, Indian suppliers do not have many staff in Europe.

Apart from this, Indian employees find it difficult to tap into the cultural aspects of doing business in Europe. Hence, their business model may not be the right approach to doing business in Europe, says Forrester.

Additionally, Europeans are not eager to make drastic changes as far as their suppliers are concerned and they are not seeking to expand quickly with their new suppliers in India. Moreover, Indian companies offers limited services in Europe, whereas multinational firms tend to offer more services in Europe.

Another weakness on the part of Indian outsourcers is that they are trying to offers services from limited locations in Europe, whereas multinational firms offer several locations for their clients. Revenue for Indian outsourcing firms tagged at $14 billion for the year ending March 31, 2009. Forrester cites that approximately $9 billion of that stems from U.K. business, while $2.1 is from Germany.

According to Sudin Apte from Forrester, these figures account for just a fraction of the IT services business available for outsourcers. Incidentally, the total revenue for IT services in France, Germany, and U.K. capped at $93 billion for the fiscal year, reports Forrester