Wednesday, October 7, 2009

Old World becoming the New Frontier for Indian IT .........

Old World becoming the New Frontier for Indian IT
PALLAVI AIYAR Brussels, 6 October

Historically Europe may be of the Old World, but when it comes to IT-related offshoring it is the new frontier.
“Ten years ago Europe contributed 15 per cent of our global revenues, five years ago 21 per cent and in the last fiscal, 30 per cent,” says Abhinav Kumar, Tata Consultancy Service’s director for marketing and communications in Europe.
After years of sniffing suspiciously at the Anglo-Saxon model of business and the outsourcing/offshoring road it has increasingly taken, continental Europe finally seems to be experiencing a shift in mindset.
“We see a change from the belief that offshoring is a temporary phase whose advantages are not sustainable to a mindset that sees it as an emerging trend that will continue to expand further,” explains Hemakiran Gupta, country manager for TCS Belgium.
After 16 years of operating in Belgium the Indian IT major today accounts for some 7per cent of the country’s IT pie. It may not sound huge but adisproportionate percentage of TCS’ European revenues come from this small country of 10 million people.
“After Germany and the Netherlands, Belgium ranks third in terms of our continental European operations,” says Gupta.
The company already has 700 consultants working with Belgian clients — 200 located locally. Out of Belgium’s top 20 firms, eight are TCS clients including the telecom heavyweight Belgacom, retail giant Colruyt and the world’s largest maker of beer, InBev.
A recent report by outsourcing advisory firm Quantum Step put the source-able IT sector in Belgium at $6.5 billion for the coming year, claiming that customers in the country will spend $1.8 billion on infrastructure management outsourcing, almost $2.6 billion on application development and maintenance and nearly $2 billion on BPO.
Gupta agrees that this is asignificant opportunity for Indian IT although he stresses that the competition is stiff. He says that of the $6.5 billion, $1 billion has already been sourced. That leaves $5.5 billion, but Indian companies still account for a relatively small portion of the market. TCS’ main competitors include Accenture, Capgemini and IBM.
Given Belgium’s modest size local competition is limited. This is not the case in other European countries like France for example. According to Kumar, 70 per cent of France’s $30-billion IT market remains controlled by local companies.
“Europe,” he explains, “is still very domestically oriented.” One reason is linguistic. Indian companies pride themselves on their English but in France or Spain, English is not enough.
“In Europe the social sector is very sensitive,” adds Gupta. Sensitivity to job losses due to offshoring is much stronger in Europe than the US or UK he explains. “They are used to doing things a certain way here and they need to be convinced that an Indian company can adapt to their way.” Indian companies have found it tough going in part because they are “very revenue-focused and so don’t prioritise getting into the social fabric,” which is necessary according to Gupta.
“We are aware that in Europe we need a different strategy to that in the US. Pure offshoring can never work here. On the other hand, pure localisation which is feasible in Latin America and other emerging markets is not appropriate for Europe either, due to financial reasons. In Europe we need a middle-path between localisation and offshoring,” concludes Kumar.
Gupta and Kumar agree that the economic recession has been a mixed bag for TCS in Europe. The majority of the company’s clients are in the banking and financial sectors.
TCS has consequently suffered from the deferral and cancellation of new projects.
On the other hand, the financial crisis has also forced companies to look at new models of operating and saving costs. “Companies are increasingly convinced of the cost-effectiveness of a projectmode rather than a staff augmentation-mode,” says Gupta.
“In Belgium we are seeing non-top 20 companies also becoming interested in outsourcing for the first time,” reveals Gupta. He says TCS is bullish on the market, with ambitions to transform itself from the leading Indian IT service provider, to the clear number one IT service provider, in Belgium. “It’s very achievable. We only need to triple in size,” he grins confidently.
Out of Belgium’s top 20 firms, eight are TCS clients, including telecom heavyweight Belgacom ( pictured ), retail giant Colruyt and the world’s largest maker of beer, InBev

My Comments:
From the above news one can derive that new frontiers are opening up for IT sector and that is coming from European countries.If one will see the revenues from European countires has been increasing year by year.
Well, that was what I was expecting and that is the reason I have included 4-5 IT stocks in my latest list.
If this is going to be the next growth driver for the IT sector then I think Indian Information sector is now again going to buzz and with no dollar depreciation coming in as they will deal with Euros and Pounds, that will do whole lot of good for the whole sector.
I remember I wrote 3-4 months back that IT sector can be an outperformer in next bull run and seems that my analysis seems on line with what is happening....

BTW, SRF ltd which was recomended here @153 on 24 Aug has crossed a double century and has still a long way to go.
So is Lumax Ind, Apar Ind and many more which I recomended here and A gr at damn cheap price......they are way above my recomended prices.....thrice, four times and more.......double I am not writing.........
I still Like Areva T&D......Siemens,Thermax,Alsthom , L&T is a Stock of the decade, next 10 years)....

One of my reader has written that someone copied my writing of" Deep Ind" and posted , in another forum , as like he has done himself.I also just came through another site of a very wellknown stock picker who has his own webstie and also charge for giving calls.He has also taken text from my post here ,DeepInd,as I can read the same lines in that call as well for Deep Ind.What I don't understand is why someone has to even copy my analysis, means text that I write in "My Comments"
Well, friends , the real trigger here is how you able to analyse the things when you go through reading a newspaper like ET,BS etc and come to the conclusion.That is a very important part of finding the stock early......and maybe some stock market expert are not that much able to look through what is coming , though they charge for their calls,and hence they have to copy "My Comments" as well.......but original will always be original and my readers will be the first to read and act upon.......but now as more and more people has started reading my post and my interpretation of stock market, readers needs to be extra catious while buying stocks as when the circumference of readers increases , one may lose buying stock which I recomend and can run up fast before one can I suggest all my readers to act judiciously when I give a call for individual stock or a new list of my pick.......
Best Of Luck............


  1. yes true which we have seen in recent times with apar and srf ltd....

    so act fast..........

  2. Rajeev, Its true that though WB doesnt understand basics of IT industry, its going to have essential point in our future life. And so IT industry has huge potential.
    Now about todays big news of RELIANCE 1:1 BONUS. My basic query is WHAT IS THE DIFFERENCE BETWEEN STOCK BONUS AND STOCK SPLIT?
    And regarding Reliance, i am a bit skeptical. They first merge RPL with RIL and then issue BONUS 1:1.
    Sometimes i think i dont understand the basic business of Relinace? Here the big brother is building multi-crore castle and playing such games with retail investors. Rajeev, Whats your view about this?
    With Regards

  3. Doc,
    I think u need to read stock market book for all these is hard to get time out and explain.....what is Bonus, Split,right etc.....