Indian IT firms trying to garner market share in Europe would need to acquire local companies since the market has strong regional players, feels Didier Herrmann, an industry veteran.
“Continental Europe is a huge opportunity. IT services market of Western Europe is about €132 billion, of which €43 billion is outsources. By 2011, the market would be worth €160 billion, and the outsourcing component will be €55 billion. But, Europe is not one country, like the US and UK, and in each country you need a different strategy,” says Herrmann.
Herrmann was the chairman of French IT firm Unilog before it was acquired by Logica and a board member of the UK-headquartered merged entity till last year. He headed Logica in France, Germany, and Switzerland, which accounted for a quarter of Logica’s 40,000-strong employee base. He now advises companies on their European strategy.
US is the biggest market for Indian IT companies, accounting for 50-80% of a company’s revenues. In contrast, continental Europe has been tough to crack with significant deals few and far between. Hence, many companies have found it worthwhile to invest management time in more receptive markets such as the US and UK, against Europe, where the gestation and payback period is longer.
“In Europe, one who controls the client controls the sector. Merely doing low-end consulting job or having some sales people will not work in Europe. The market has strong regional players who have deep relationship with the clients. Most Indian companies do not have access to the very senior management and hence it is difficult to convince the middle management on the advantages of outsourcing,” says Herrmann.
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