India has good opportunity in offshoring

BANGALORE, INDIA: After global slowdown that immensely impacted the US market, Europe emerged as one of the potential markets for growth and expansion. But Indian companies looking at these markets need to tweak their strategies and approach to tap this market, through local touch and increasing their comfort level in doing business.

During a press briefing here today, Sudin Apte, principal analyst at Forrester, shared that Europe is a lucrative opportunity which is not getting realized by traditional offshore sales story, but only culturally fit providers would have better chance to succeed.

“Continental firms are facing cost-savings constraint and are opening up towards outsourcing. Taking this opportunity, Indian companies need to bring in the component of cultural connect and comfort in their business model and tap the market potential,” he said.

“They should adopt various customized model by layering offshore centers in regions that are culturally similar like Morocco and Romania with core work at Indian centers. If they continue following the similar US formula, it would take more than 2-3 years for them to get some success.”

Sharing a few data, he explained that India possesses a good opportunity for offshoring. In March 2009, over all export to Europe was to the tune of US$ 14 billion, a large chunk of which (around US$9 billion) came from the UK. In three years, export to Continental Europe has grown by a CAGR of more than 45 per cent.

In next 10-12 months, there would be substantial increase of around 5-10 per cent of the offshoring services, from the UK, but lower than Germany and France. But this would come from just 15-17 per cent of the companies that are global in nature and have already been part of the offshoring theme, while around 30-40 companies would stay out.

Apte elaborated that some of the major factors that are inhibiting Indian servicer providers from easily penetrating in the continental market for the offshoring are federated decision making in the European companies, complex procurement model, language barrier and political issues.

He said, “European market favors the tradition where CEO takes major IT related decision, even with outsourcing. Political and Visa related issues are other roadblocks on the way.”

Apte specified that the major obstacles from Indian companies have been firstly, their inability to culturally connect their need to derive more businesses as faster as possible and the US-formula model of offshoring.

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