Outsourcing spotlight on EU

Sharp Focus

Calcutta, March 27: Outsourcing projects from the European Union are expected to double in the next five years. TPI, the outsourcing advisory firm, feels that Indian ITeS and BPO companies should shift focus from the US to medium and large-sized companies in the UK and Western Europe.

Within Europe, UK is the largest IT market at $39 billion and growing at a CAGR of 7.4 per cent. Nasscom, however, estimates that Germany, France and Italy alone have the potential to offer the Indian industry over $2 to $3 billion in export revenues by 2008.

The IT services market in Germany is likely to be $40 billion this year, while France is expected to be close to $30 billion.

The Indian arm of UK-based publishing company SPG Media is organising a three-day networking forum for European and Indian companies. ?Around 42 to 45 European companies from banking, insurance, retail, supply chain management and telecom sectors with a turnover of $500 million will participate in the forum. Around 20 Indian ITeS and BPO companies will use the platform to generate business,? said Maninder Singh, manager at Forums, SPG Media.

The European Outsourcing Forum 2005 will be held in Dubai between June 16-19. The EU accounted for 49 per cent and the US 44 per cent of the total ?40 billion outsourcing business in 2004. In the corresponding previous year, the US had accounted for 47 per cent of the business, while the EU 41 per cent.

?It is the right time for mid-sized Indian outsourcing companies to shift focus from a declining US market to the EU market,? says Vijay Chintamaneni, director, Indian operations, SPG Media.

Europe accounts for around 30 per cent of the global IT services market. IT services spending in Western Europe is expected to grow at a CAGR of 11 per cent in the medium term.

Unless there is a shift in focus, Indian companies are likely to lose a fair amount of the business opportunity to rivals in Eastern Europe and Southeast Asia.

Telecom and financial services are potential sectors for Indian companies.

According to Nasscom, the mandatory implementation of the International Securities Identification Number by stock exchanges in Europe also offers a sizeable opportunity.