Posts Tagged ‘Europe’

Outsourcing Could Cost Europe 1.9 Million Jobs

August 22nd, 2013

Large firms in Europe are losing over 130,000 jobs each year in IT, finance and other areas, as jobs are increasingly offshored to cheaper locations, meaning that by 2017, some 1.9 million European jobs will have disappeared, according to new report.Outsourcing2

Offshoring, combined with technological advances that can replace jobs, and the euro zone’s low-growth business environment, could result in the loss of half of all “back office” jobs that existed in Europe in 2002, according to a report by consulting firm The Hackett Group. Of the roughly 4.2 million business services jobs that existed in Europe in 2002, 46 per cent, or 1.9 million, will have disappeared by 2017.

Source:http://forexblog.oanda.com/20130821/outsourcing-could-cost-europe-1-9-million-jobs/

IT firms push biz in Europe with buys, local hires

May 20th, 2013
Indian IT companies are aggressively pursuing a strategy of adding local flavour to their European operations. They realise this would be the only route to get significant business opportunities from the continent, which so far has been quite wary about outsourcing and offshoring. Given the diversity in Europe, Indian IT companies are now focused on establishing a strong local presence by employing nationals of countries they are based in.
“The European market is generally conservative and they take a long time to decide on IT outsourcing. A strong local presence by Indian companies will give them better access,” says Pradeep Mukherji, president, Avasant, an IT-BPO advisory firm.
Indian IT companies are taking the inorganic route, the latest example being acquisition by TCS of French company Alti for R530 crore. The acquisition gave TCS 1,200 employees with a presence in France, Belgium, Switzerland and Algeria. The other IT majors from India who have taken this route are Infosys, Wipro and HCL Technologies. In September last year, Infosys acquired Lodestone, a Switzerland-based management consultancy firm, for around $350 million. Infosys got close to 800 people through the acquisition, with a majority of people based in Europe. The buyout also gave Infosys access to over 200 clients across multiple sectors.
HCL’s acquisition of UK-based Axon in 2008 gave it over 2,000 employees, while TCS, which bought BPO firm Pearl in UK in 2005, got around 950 people. Wipro has made several smaller acquisitions in Europe in the past like NewLogic, Saraware and Enabler. Similarly, Cognizant recently announced the acquisition of German firm C1 to increase its local presence.
Earlier, the overwhelming percentage of revenue for Indian IT companies in Europe came from the UK, but this has been steadily shifting over the past couple of years. This is reflected in the kind of presence they have built over the years in countries such as Italy, Spain, Nordics, Portugal, Belgium, etc.
Indian IT companies have also steadily opened development centres in the continent, primarily in eastern Europe in countries such as Czech Republic and Hungary, given the specialised IT skills available in this region.
Pradeep Udhas, partner and head, IT/ITeS, KPMG India, feels the inorganic route is the best way for Indian companies to penetrate Europe. “There is an acceptability issue in Europe, which includes language, culture and other areas. Unlike IBM and Accenture, which have a global presence, Indian IT firms have very small set-ups.”
Analysts point out that the recent acquisitions by Indian companies in Europe is more of a strategic fit than anything else. “I don’t see these acquisitions as major revenue boosters. Most leading players are sitting on a good cash pile and valuations of these companies are not expensive to strike a deal,” notes Ankita Somani of Angel Broking.
Of the $76-billion IT-BPO exports from India, Europe contributes about 25%.

Indian IT companies are aggressively pursuing a strategy of adding local flavour to their European operations. They realise this would be the only route to get significant business opportunities from the continent, which so far has been quite wary about outsourcing and offshoring. Given the diversity in Europe, Indian IT companies are now focused on establishing a strong local presence by employing nationals of countries they are based in.

“The European market is generally conservative and they take a long time to decide on IT outsourcing. A strong local presence by Indian companies will give them better access,” says Pradeep Mukherji, president, Avasant, an IT-BPO advisory firm.

4

Indian IT companies are taking the inorganic route, the latest example being acquisition by TCS of French company Alti for R530 crore. The acquisition gave TCS 1,200 employees with a presence in France, Belgium, Switzerland and Algeria. The other IT majors from India who have taken this route are Infosys, Wipro and HCL Technologies. In September last year, Infosys acquired Lodestone, a Switzerland-based management consultancy firm, for around $350 million. Infosys got close to 800 people through the acquisition, with a majority of people based in Europe. The buyout also gave Infosys access to over 200 clients across multiple sectors.

HCL’s acquisition of UK-based Axon in 2008 gave it over 2,000 employees, while TCS, which bought BPO firm Pearl in UK in 2005, got around 950 people. Wipro has made several smaller acquisitions in Europe in the past like NewLogic, Saraware and Enabler. Similarly, Cognizant recently announced the acquisition of German firm C1 to increase its local presence.

Earlier, the overwhelming percentage of revenue for Indian IT companies in Europe came from the UK, but this has been steadily shifting over the past couple of years. This is reflected in the kind of presence they have built over the years in countries such as Italy, Spain, Nordics, Portugal, Belgium, etc.

Indian IT companies have also steadily opened development centres in the continent, primarily in eastern Europe in countries such as Czech Republic and Hungary, given the specialised IT skills available in this region.

Pradeep Udhas, partner and head, IT/ITeS, KPMG India, feels the inorganic route is the best way for Indian companies to penetrate Europe. “There is an acceptability issue in Europe, which includes language, culture and other areas. Unlike IBM and Accenture, which have a global presence, Indian IT firms have very small set-ups.”

Analysts point out that the recent acquisitions by Indian companies in Europe is more of a strategic fit than anything else. “I don’t see these acquisitions as major revenue boosters. Most leading players are sitting on a good cash pile and valuations of these companies are not expensive to strike a deal,” notes Ankita Somani of Angel Broking.

Of the $76-billion IT-BPO exports from India, Europe contributes about 25%.

Source:http://www.financialexpress.com/news/it-firms-push-biz-in-europe-with-buys-local-hires/1117656

Who are Europe’s top IT services firms in Q1 of 2013 and what happened to IBM?

May 8th, 2013

The EMEA region saw $762m worth of IT services contracts signed at the beginning of this year. This was a 20% fall in contract values in the first three months of 2013 compared to the same period in 2012. This was according to the latest report from ISG, which registers all contracts worth over €4m.outsourcing52

I thought I would publish ISG’s list of the companies that took the biggest shares of this spend. What is a surprise is IBM’s absence? Strange, in 2009 according to Gartner IBM was the number one IT services firm in Western Europe (which accounts for most the EMEA spend.)

Most the usual suspects are all there but there are also a few I don’t know at all, as well as some specialists thrown in.

Top 20 IT services firms in terms of total EMEA contract value won in the first three months of 2013. This is in alphabetic order

1 – Accenture
2 – AT&T
3 – Capgemini
4 – CGI
5 -Communisis
6 – Evry
7 – Genpact
8 – HCL
9 – HP
10 – Infosys
11 – Lottomatica
12 – Nokia
13 – SQS
14 – Swisscom
15 – TCS
16 – Thales
17 – Tieto
18 – Virtusa
19 – Xchanging
20 – Xerox

Source:http://www.computerweekly.com/blogs/inside-outsourcing/2013/05/who-was-europes-top-it-services-firm-in-q1-of-2013-and-what-happened-to-ibm.html

Outsourcing boosts Accenture, allays Europe concerns

July 2nd, 2012

Robust outsourcing revenue helped Accenture Plc beat Wall Street expectations for the ninth straight quarter, but the company lowered its full-year profit outlook because of a strong dollar.

Investors shrugged off the company’s comments that some clients in Europe were cutting or deferring investments in consulting projects, pushing Accenture’s shares up 4 percent after the bell.

“We have seen renewed challenges around the debt issue in Europe, as well as confirmation of a slowdown in the forecast for the global economic growth,” Chief Executive Pierre Nanterme said on a conference call with analysts.

Europe accounts for 40 percent of the company’s total revenue.

Accenture, which competes with Cognizant Technology Solutions Corp and India’s Infosys Ltd, remains upbeat about its outsourcing business, especially in China and other emerging markets.

JP Morgan technology analysts recently lowered their forecast for global IT spending growth to 2.2 percent from 3.8 percent for the year.

Rival Cognizant cut its full-year forecast for the first time in nearly four years last month, citing weak demand from financial services clients in North America, echoing sentiments expressed by Infosys and Wipro Ltd.

Infosys, which is expected to report first-quarter results on July 12, may lower its fiscal 2013 revenue outlook on weak spending and adverse cross currency movements, according to a Jefferies report.

Accenture now expects a full-year profit of $3.80 to $3.84 per share. It had previously forecast a profit of $3.82 to $3.90 per share.

March-May net income attributable to shareholders rose to $752.4 million, or $1.03 per share, from $692 million, or 93 cents per share, a year earlier.

Shares of the company rose to $58.75 after the bell. They closed at $56.63 on Thursday on the New York Stock Exchange.

The stock has fallen 13 percent since March 26, when it touched a life-high of $65, days after the company reported second-quarter results.

Source:Robust outsourcing revenue helped Accenture Plc beat Wall Street expectations for the ninth straight quarter, but the company lowered its full-year profit outlook because of a strong dollar.

Investors shrugged off the company’s comments that some clients in Europe were cutting or deferring investments in consulting projects, pushing Accenture’s shares up 4 percent after the bell.

“We have seen renewed challenges around the debt issue in Europe, as well as confirmation of a slowdown in the forecast for the global economic growth,” Chief Executive Pierre Nanterme said on a conference call with analysts.

Europe accounts for 40 percent of the company’s total revenue.

Accenture, which competes with Cognizant Technology Solutions Corp and India’s Infosys Ltd, remains upbeat about its outsourcing business, especially in China and other emerging markets.

JP Morgan technology analysts recently lowered their forecast for global IT spending growth to 2.2 percent from 3.8 percent for the year.

Rival Cognizant cut its full-year forecast for the first time in nearly four years last month, citing weak demand from financial services clients in North America, echoing sentiments expressed by Infosys and Wipro Ltd.

Infosys, which is expected to report first-quarter results on July 12, may lower its fiscal 2013 revenue outlook on weak spending and adverse cross currency movements, according to a Jefferies report.

Accenture now expects a full-year profit of $3.80 to $3.84 per share. It had previously forecast a profit of $3.82 to $3.90 per share.

March-May net income attributable to shareholders rose to $752.4 million, or $1.03 per share, from $692 million, or 93 cents per share, a year earlier.

Shares of the company rose to $58.75 after the bell. They closed at $56.63 on Thursday on the New York Stock Exchange.

The stock has fallen 13 percent since March 26, when it touched a life-high of $65, days after the company reported second-quarter results.

HCL continues to have a good run in Europe

April 9th, 2012

Despite the euro zone crisis, HCL Technologies, India’s fourth-largest information technology services company, has seen a huge success in Europe in the past year in clinching deals. Watchers say the share of Europe in its overall revenue in 2011 improved from the previous year by five percentage points to 27 per cent.

Though HCL entered later than its Indian rivals, it has logged the highest growth in the region over the past three years. The European business grew 22 per cent through 2008-11, compared to Wipro’s 13 per cent, Tata Consultancy Services’ 11 per cent and Infosys’ five per cent in the same period, show industry estimates.

According to Ankita Somani, research analyst with Angel Broking,“Of the Indian Tier-I vendors, HCL gets its highest revenue (as a percentage of the total) from the European region. Though a late entrant, it enjoys an edge over competitors due to its local presence, through the acquisition of Axon in 2008.”
In the past three months, the company has signed two major deals in Europe, one of these being the biggest outsourcing one in the region over the past year.

“HCL has seen continued traction in Europe, with many first-time outsourcers,” said Avinash Singh, senior vice-president, IT, at Enam Securities, in a recent report. “We expect the new deal wins to be consistently led by, among other things, strong presence in continental Europe, where the deal pipeline appears to be picking up.”

In the calendar year 2011, revenue from the European region grew 15.5 per cent for TCS over 2010, while it was 13.4 per cent for Infosys and 20 per cent for Wipro. HCL reported 23.9 per cent growth in Europe in 2011 over 2010.

Strong local presence
“When I moved to Europe 12 years ago, the total business was just $6 million and we had only 100 people working out of there. Now, we get $1 billion revenue from Europe, with 4,500 people working for us out of there,” said Rajeev Sawhney, president and in charge of Europe for HCL.

One of the biggest differentiators in Europe was its acquisition of UK-based IT services and consulting company Axon. HCL acquired it in 2008 for £440 mn, helping it attract more business. “We operate through our local arms in Europe. Over the decade, we have invested a lot there,” said Sawhney.

In 2009, when it won the Nokia deal, it established a 100-seat delivery centre in Helsinki. Earlier this year, its deal with Statoil saw creation of a Global Excellence Centre at Stavanger, Norway. Its deal with UPM last month involved the creation of a data centre in Espoo and the transfer of 250 employees.

“Europe is a closed culture. It has now opened up to the concept of outsourcing now. So, companies with a local team and presence would definitely benefit in the long run,” says Somani of Angel Research.

Source:http://business-standard.com/india/news/hcl-continues-to-havegood-run-in-europe/470617/

Wipro goes hyper local in Europe

March 22nd, 2012

IT major Wipro has re-engineered its traditional outsourcing model that has worked very well in the US, for its European markets.

For a long time Europe as a market for Indian IT companies has flattered only to deceive . Tough labour laws, language barriers and a conservative mindset towards outsourcing have meant that Europe, with the exception of the UK, has been a difficult terrain to penetrate. A Deutsche Bank report in December 2011 put Wipro’s revenue from Germany and France at less than 3% each of total revenue. The IT market in 2011 for these countries stood at $73 billion and $61 billion respectively.

Realizing that it is too large an opportunity to procrastinate over, Wipro is betting on a differentiated strategy to deal with the geography, which chief marketing officer of Wipro, Rajan Kohli, calls “hyper local” .

The idea is to take advantage of the opportunity that is opening up in Europe, as companies look to reduce cost and improve process efficiencies in difficult times. Kohli says the approach is twin-pronged – boosting local presence in goto-market roles as well as delivery , and treating each country in Europe differently.

In the US, IT companies typically have less than a quarter of its workforce as local hires. In Europe, Wipro plans to increase its local workforce to 50% in the next two years. Currently locals account for 38% of its 7,000 employees across Europe.

The Deutsche Bank report says Wipro is positioning itself as a hybrid of the Infosys and Cognizant delivery models in Europe. While Infosys seeks to add more local headcount, Cognizant is focusing on increasing its nearshore presence. Wipro is doing both. Among Indian vendors, Wipro has made the most investments in nearshore centres and has the largest base of 20 delivery centres across Europe , including Hungary, Poland , Portugal and Romania.

European countries are also being treated heterogeneously . Rather than going with its entire gamut of offerings, the company is micro-segmenting the markets by identifying hotspots in each, like manufacturing in Germany, financial services in France and pharma in Switzerland.

“We are even building specialists in sub-verticals like investment banking,” Kohli said.

Though still early to draw conclusions on whether it is getting its strategy right in Europe, analysts say that some of the recent moves are beginning to yield results. The company’s Europe revenues grew 24% to around $1.7 billion in 2011 and client satisfaction numbers are up.

The company has widened its gap with Infosys in Europe, and is second only to TCS in revenues from Europe. The company has some large clients like Ericsson, Harman, Astra Zeneca , Morrisons and Arcelor Mittal in Europe.

Source:http://timesofindia.indiatimes.com/tech/news/outsourcing/Wipro-goes-hyper-local-in-Europe/articleshow/12358634.cms

Europe crisis, boon for Indian IT firms

March 15th, 2012

While Greece is still not completely out of the woods, the news comes as good cheer for Indian IT companies that expect to see more outsourcing coming from the troubled zone.

While the US has been the largest geography contributing in excess of 50 per cent, Europe has been steadily growing since the last seven years – albeit at a slow pace. However, as the Euro Zone crisis reached fever pitch six months ago, concerns around business from Europe reached a zenith.In the third quarter of the 2012 fiscal, the top Indian IT companies surprised industry watchers by posting better than expected quarterly revenues.

In the third quarter, Infosys saw significant growth in Europe as the company bagged two multi-year deals in excess of $500 million. Europe contributes 22.6 per cent to Infosys’ revenues and it grew 19 per cent in calendar year 2011, according to analysts.”We see great opportunities in this region and we will continue our investments in Europe for long-term benefits,” said Mr B.G. Srinivas, Head of Europe and Global Manufacturing, Engineering Services and Enterprise Mobility, Infosys.

Growth came from existing clients across financial services, manufacturing and retail and the company saw a jump in the number of clients and added 14 clients in the quarter.

TCS similarly added four clients in the third quarter and all of them are large multi-million dollar deals.

Interestingly, Cognizant’s European revenues exceeded $1 billion in 2011, which is by far the best growth of any IT services firm in Europe. Wipro grew 12 per cent y-o-y in the third quarter.’European corporations are working hard to become more competitive. This means cutting costs, becoming more agile, addressing growing talent shortages, and globalising their operating models.

A growing number of European companies believe that offshore firms are the ideal partners for helping them achieve these business objectives,’ said Mr Peter Schumacher, President & Founder, Value Leadership Group Inc.While the logic for outsourcing or offshoring was always compelling, recent news of Greece being bailed out offers positive sentiments across the region which could result in more outsourcing deals.

‘This positivity is expected to be carry on for few months and we are seeing increased viability of offshoring/outsourcing,’ said Mr Shashi Bhusan, Senior Research Analyst, Prabhudas Lilladher.Indian tech majors have been investing in Continental Europe over the years, setting up development centres in Czech Republic, Poland and other countries to cater to service markets in Germany and France.

Source:http://news.in.msn.com/business/article.aspx?cp-documentid=5928416#page=1

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