Survey reveals outsourcing growth declines in Europe

A recent survey by the global outsourcing advisory firm proficient in IT, finance and accounting (F&A) and HR, Equaterra has discovered that the demand for information technology outsourcing has dwindled in Europe. To be precise, the survey findings reveal a five per cent drop in the growth rate for IT outsourcing during the second quarter of 2010 in comparison to the corresponding period in 2009.

While almost 50 per cent of the sourcing consultants covered by the survey globally admitted that the demand for IT outsourcing was once again showing up, advisers in Europe said that the requirement had dropped from 45 per cent in the first quarter of 2010 to 40 per cent during the second quarter of the year. In fact, several sourcing advisers are now of the view that the prevailing fiscal environment in Europe is either slackening or compelling enterprises to reorganize their outsourcing plans compared to the situation during the first quarter of 2010.

According to a news report, the global sourcing advisers surveyed by Equaterra took into consideration the demand for business process outsourcing (BPO), information technology (IT) outsourcing, IT services provided by other third parties and additional internal process enhancements.

Among the most notable findings of the study undertaken by Equaterra is that as many as 55 per cent of the sourcing advisers surveyed said that the fiscal environment in Europe was slackening and forcing people to reorganize their outsourcing policies. In fact, this view was held by only 36 per cent of the sourcing advisers during the first quarter of the year.

Meanwhile, another report says that notwithstanding the decline in revenues from Europe during the first quarter (April 1 to June 30, 2010) of the 2010-2011 fiscal, India’s second largest IT revenue earner Infosys Technologies continue to have faith in business gaining momentum from the region. According to B G Srinivas, Infosys head of European business, the deals in pipeline appear to be good enough.

Srinivas is optimist that there will be growth in demand for IT and BPO services from Europe. At the same time, he says that the major question is whether the growth will pick up the pace with the prevailing debt crisis in the region. He hoped that the latest intervention should aid in diminishing the panic and things ought to return to normal in the next one or two quarters.

It may be mentioned here that Infosys is seeing toehold in financial services, energy and utilities, manufacturing, pharmaceuticals and retail, while telecom seems to be a ragbag. According to Srinivas, several Global 1,000 firms in the UK, Germany Switzerland and France have shown keen interest in outsourcing their jobs to India, particularly in the AMD, consulting packaged implementation, systems integration and BPO sectors. Although he said that the company was looking at two major contracts of the size of $40 to $100 million from Europe, he refused to reveal further details.