With the U.S. outsourcing market becoming saturated following an initial wave of outsourcing projects, Europe is the central focus for Indian outsourcing firms. Denise Colgan, TPI’s marketing chief for Europe, Africa, and Middle East says the European market has taken the lead over the U.S. in terms of new contracts for the last three years.
Chairman of Wipro, Azim Premji, said last year that he was eager to push up the number of local hires working for the company’s European segment from 30 percent to approximately 60 percent. He has realized that pushing the company’s business in Europe would mean battling labor laws, overcoming language barriers and a resistance to outsourcing. Hence, Premji believes Wipro will require a stronger local presence.
Meanwhile, reports say that the U.K. government will move to slash the number of employees working for low wages on short-term visas at Indian outsourcing firms.
Aya Mukerjee, the chief of Indian outsourcing giant Wipro, has been hiring Indian employees in the U.K. and his Indian employees are paid the same as their U.K. counterparts. Mukerjee said in an online report by The National, though the salary might vary in Reading, London, and Munich as opposed to Bucharest, there is no difference in salary for the same position.
According to the new laws in the U.K., software engineers from India making less than £20,000 per year would not be eligible for short-term job permits. This is an attempt to encourage hiring within the U.K. Nonetheless, this law is not expected to put a dent in Wipro’s plans. Apart from the 25 graduates hired by Wipro in 2008 from engineering schools within the U.K. who will be returning from their training period in Bangalore, the IT firm is also adding senior U.K. and European IT executives to its workforce.
According to TPI, companies in Europe inked outsourcing contracts worth E14.6 billion just in the first half of 2009. That figure is in comparison to E10.8 billion in North and South America and E6.8 billion in the Asia Pacific region. Incidentally, Europe accounted for 26 percent of Wipro’s net revenue, 28 percent of revenue for Infosys, and 27 percent of TCS revenue for the quarter ending in March. Before the recession ravaged Europe, Indian IT firms were up 40 percent in terms of annual growth until 2008.
Even amid the economic downturn, the granting of BP’s 5-year outsourcing contract valued at $1.5 billion to Wipro, Infosys and TCS along with global players Accenture and IBM reveals that Indian outsourcers have migrated their way up the value ladder. They are now competing with firms like Accenture, IBM and French outsourcer Capgemini.