Indian Outsourcing Giants Vying for Nordic Contracts Valued at $100M

The largest Nordic Bank, Nordea AB along with other banks in the region, SEB and Svenska Handelsbanken are new players in the offshore arena, and they plan to outsource their IT work to India. This is an attempt to reduce operational costs by as much as 30% in order to cope with the downturn in the economy.

Reports say that Indian technology vendors, i.e. HCL, TCS, Infotech, Infosys, Wipro, TCS and L&T are in talks with Nordic clients, vying for outsourcing deals. These contracts are valued at close to $100 million and will run into the next few years.

Meanwhile, EquaTerra - an consulting firm in outsourcing - examines about 370 outsourcing agreements inked by more than 200 Nordic clients. The advisory firm said in its conclusion that Indian IT service provides fared better than their European counterparts like Capgemini and TetoEnator with respect to customer satisfaction. EquaTerra looked at nearly $4.3 billion worth of contracts inked by these clients.

Incidentally, countries in the Nordic region, particularly Sweden have a relatively high cost structure in place. This has placed a considerable amount of pressure on domestic clients who are seeking inexpensive resources in places like India. A deal with Indian tech vendors would make it possible for these clients to cut costs by about 30% - 40%.

VP and chief of European operations at TCS, A.S. Lakhminarayanan said in statement, the demand for outsourcing services remains stable and the industry is witnessed continued growth, though the Nordic IT market is projected to turn out flat this year. Although most other markets in the region have remained the same or declined, Norway is speculated to demonstrate one of the biggest IT market growth rates in Europe with approximately 1-2% growth in 2009.

The elevation of the economic crisis is forcing clients like Handelsbanken to consider offshoring, reports Economic Times. India's largest software outsourcer, TCS stated that Nordic clients are indeed leaning toward their outsourcing options.

EquaTerra stated recently that India is still the favored offshore destination for companies in the region with 61% of Nordic firms relying on Indian firms for their global sourcing requirements. Although Nordic clients prefer to roll out their outsourcing plans with small deals value around $10-$20 million, they are speculated to spike those figures after results have been confirmed.

Despite other European regions like Germany, which has tough labor laws for establishing offshoring, Nordic countries tend to be more flexible. Nonetheless, early in their relationships with outsourcers, companies in the region are cautious in handing out multi-year mega contracts.