Outsourcing IT in Europe
When IT executives speak about Europe, be prepared to get confused. This graph from Nasscom is a typical example. The caption says: Demand surge in Europe, the highlight of the year. But the graph suggests the contribution from Europe has actually come down from 18% to 17.1%
What’s behind this hazy picture? Cognizant’s president R Chandrasekaran gives an answer in an interview to Hindu published today: When I ask my clients how the European economy is doing, they says its sort of going sideways. One day you see good news, the other day you see bad. It’s like describing the Indian democracy. They aren’t able to move forward because some country has elections at any point, and, because of it, they aren’t able to act. They aren’t able to take bold decisions.
While it’s difficult to predict the direction it might take, there’s little doubt that companies are looking at it more seriously than ever before. Part of the reason is to spread their risks (Indian IT’s predominant market continues to be the US); and part of the reason, interestingly, is the uncertainty in Europe. That has tempered the valuation of IT companies there. We briefly looked at this phenomenon last June. ET today reports ”at least three planned acquisitions, each valued at under $50 million ( Rs 270 crore) in Germany and another in France valued at a little over $100 million, are in the final stages.” Expect some action there.
IBM and domestic IT
For long IBM has followed an unique way of pointing to its competitors the riches in their own backyard. First, it was the speed at which it grew its headcount in the country – thereby confirming to everyone that India strategy can work for everyone and then by winning big domestic IT contracts – thereby showing that India strategy need not confine itself to resources. There’s a big market out there.
Indian IT services companies woke up, and the according to the recent strategic review by Nasscom, domestic revenues – from a lower base – will grow faster than exports.
That’s clear now. But back when it was not looked at with seriousness, nothing highlighted this opportunity as well as the outsourcing contract IBM won from Airtel. Now, Mint reports that Indian vendors are eyeing for it as it comes up for renewal.
Often, the real visual relief in a business newspaper comes not from photographs or infographics, but from the stories of start-ups that have identified a gap in the market and found an efficient way to plug it. Today’s Business Standard talks about Innoz – which is into offline search. My colleague Rohin featured it in our annual issue among one of the five start-ups to watch. Business Standard has some numbers that gives a sense of how it has been progressing: “In the first 18 months of its operations, Innoz answered a billion queries through SMS Gyan. Currently, it has about 120 million active users, and responds to about five million queries a day. The company adds one to two million users every month. Last year, its revenue stood at Rs 6 crore. By the end of 2014-15, it expects its revenue to be Rs 100-200 crore.”
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