Business Strategies Of Indian It Companies

Published Date: 02 Nov 2017

A Dissertation Proposal for

Post-Graduate Programme in International Management

by

Aditya Sharma

Under the guidance of

Prof. S N Raina

Chairperson, Strategic Management

MDI Gurgaon

Management Development Institute

Gurgaon 122 007

11th Feb, 2013

Business Strategies of Indian IT companies for European Markets

by

Aditya Sharma

Management Development Institute

Gurgaon 122 007

11th Feb, 2013

Business Strategies of Indian IT companies for European markets

by

Aditya Sharma

Under the guidance of

Shiri S N Raina

Chairperson, Strategic Management

MDI - Gurgaon

Management Development Institute

Gurgaon 122 007

11th Feb, 2013

Certificate of Approval

The following Report titled "The Business Strategies of Indian IT companies for European Markets" is hereby approved as a certified study in management carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the award of Post-Graduate Diploma in International Management for which it has been submitted. It is understood that by this approval the undersigned do not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein but approve the Report only for the purpose it is submitted.

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Abstract

Indian IT industry has done exceedingly well, especially in last two decades. It has been the major job creator and an engine of economic growth. Most of this growth was driven by the work outsourced from USA by the big organization in all industry verticals with Banking and Finance sector leading the way. This over- dependence on USA as well as on Banking vertical was highlighted during the 2008 financial crises. Since then Indian IT companies are consistently looking to diversify in terms of geography and service offerings. In the process to do so, Europe has emerged as leading target market, which has a potential market size equivalent to USA and yet to be tapped growth opportunities. However, for Indian IT companies it has always been a big challenge to do business in Europe. Traditional methods of doing business like on shore - off shore model, body selling has not worked well in Europe in the past. This may be attributed to government policies, culture and language differences, etc. Moreover, the recent European crises have led to even bigger business challenges. This thesis investigates what are the challenges Indian IT companies are facing in Europe and how they are planning to deal with this challenging and diverse business environment in Europe.

Table of Contents

Business Strategies of Indian IT companies for European Markets

Contents

List of Abbreviations

IT: Information Technology

ITES: Information Technology Enabled Services

USA: United States of America

List of Tables

List of Figures

Literature Review

India's off shoring sector, the world's largest and fastest growing, is dominated by IT services, which play a major role in the country's overall economic growth.  For the decade to come, there are no indications that the offshore outsourcing phenomenon will subside [Alex van den Bergh, 2011]. Even though many have predicted that India would lose its leading role in outsourcing, it has remained the number one offshore location since the beginning of the 1990s [Alex van den Bergh, 2011]. The global economic downturn has slowed the growth of India’s technology and business services industry, but beyond the current crisis the industry faces a changing global environment that will probably cut into the country’s worldwide market share.

The Indian technology and business services industries has had an unprecedented impact on Indian economy [Clott,2007]. The sector’s contribution to the national GDP has risen from 1.2 per cent in 1997-98 to an estimated 7.5 per cent in 2011-12. The industry has spawned growth in ancillary industries such as security services, catering, construction and transportation [Clott,2007]. Furthermore, it has strengthened India’s foreign reserves along with creating career opportunities for the youth (70 per cent of the workforce is in the age-group 26 to 35 years). The information technology industry has set new standards for professional environment. The industry has also enhanced India’s credibility as a business destination by creating a model of global 24x7 service delivery while promoting a focus on quality (65 per cent of Capability Maturity Model or CMM Level 5 firms are based in India). India has developed as a major outsourcing hub on account of its proficient, technically skilled and cost effective human capital base with strong governmental support. [Mukherjee, 2013]

Factors like weakening rupee, high production input prices, hike in borrowing costs, and geo-political situation continued to plague the industry in 2012. With an anti-outsourcing tirade in America rising, Indian software giants plan to expand their businesses in Europe through new ventures in a bid to reduce their revenue from the United States to 40 per cent in five years from over 60 per cent currently [Khurana, 2013]. The overall European IT services market is roughly the same size as the US IT services market, yet the penetration of the global-delivery model of Indian IT companies in Europe is currently a fraction of that in US.

In 2008, India accounted for 55 per cent of global IT off shoring and about 35 per cent of BPO (business process outsourcing) services. Among India’s major export destinations of computer software and services, the United States (US), with a share of 55 per cent, topped the charts in 2009-10, followed by the European Union (EU) (mainly the United Kingdom (UK), Netherlands and Hungary) with a share of 31.33 per cent. [Mukherjee, 2013]

The ability of majority of workforce to speak fluent English has given India a distinct advantage over the other low cost, non-native English speaking countries like China, regions of Asia Pacific, Latin America, and Middle East. [Bhatnagar, 2008] The United States has been an early adopter of outsourcing in general and of offshore outsourcing in particular [Khurana, 2013]. There is no surprise that the more than 75 per cent of the revenue for Indian IT companies came from the USA, the biggest English speaking nation in the world as well the largest single market for information technology product and services.

In the recovery phase of Global financial crises, Indian IT companies succeeded to an extent in turning the situation to their advantage. As companies across industries were looking to cut cost and optimize operational efficiency, IT companies continued to record profits.

India does face significant challenges in the years to come: Its financial attractiveness is challenged by cheaper regions and its stability remains subject to international developments that are only partly under its own control, most notably its relation with neighboring country Pakistan. Also its public infrastructure (e.g., roads, electricity and hotels) is struggling to keep up with the pace of its economic and population growth; traffic in major cities can be a true challenge and access beyond the major or midsized locations is far from adequate. Finally as both IT outsourcing (ITO) and business process outsourcing (BPO) are usually knowledge-intensive tasks, the demand for skilled personnel can be a limiting factor and companies find themselves competing hard for the best-in-class people The firms understood the need for diversification and maintaining competitive edge over the other newer outsourcing destination like Philippines, Mexico, Brazil etc, which also catching up very fast in setting up a conducive technology industry environment in their respective countries. [Alex van den Bergh, 2011].

Europe comes with its own set of unique challenges. Though Europe as whole may be big market but it is actually an amalgamation of heterogeneous culture, language and government policies. It is these challenges which have made the task of Indian IT companies difficult. Moreover, Indian IT companies are facing a big challenge from other outsourcing destinations.

Eastern Europe has also emerged as outsourcing destination for companies from continental Europe. Although Eastern Europe’s governments have not wooed business as effectively as those of the more established destinations, off shoring in that region offers three primary advantages: low wages comparable to India’s, a relatively low risk profile for key factors such as reliable infrastructure, and cultural and geographical proximity to Western Europe. Eastern Europe is a particularly attractive option for Western European companies. Not only is it nearby, but companies can often find language capabilities (especially French and German) that are less readily available in India. At the same time, the new members of the European Union—particularly the Czech Republic, Hungary, Poland, and Slovakia—can offer average labor cost savings of 40 to 60 percent over costs in Western Europe, while cities in EU-candidate and non-EU countries can offer cost advantages of 60 to 80 percent. However, companies from Western Europe have been caution with the choosing Eastern Europe as outsourcing destination. First, Eastern European IT services providers, at their current scale, have difficulty keeping up with the 20 percent growth they can generate in their domestic markets. Second, regulations and inconsistencies in labor laws complicate expansion beyond national borders—expansion that is a necessary precursor to gaining scale comparable to that of the global providers. [McKinseyQuaterly, 2012]

So, there is gap in European IT services and outsourcing market. On the surface, Indian IT companies look a perfect to fill this gap. But, they have not been able do so with their traditional strategies, which have worked in the past with US. They are trying to improvise and utilize their existing resources like high liquidity and labour mobility to tap the market. Almost all Indian software giants are looking to make acquisitions and/or strategic joint ventures in order to make their presence felt in the European market. They have also rapidly expanding their offices in western as well as Eastern Europe in order to be closer to the client. Additionally, NASSCOM and government is also playing a vital role in strengthening the bi-lateral trade ties, which is led by technology business enabling processes

Continental Europe is widely seen as the market with still the largest growth potential for offshore outsourcing. The main factor contributing to its slow start is Europe’s diversity. Even though the European Union has greatly unified its economic climate, most notably with the introduction of a single currency, Europe is still vastly different in language, local laws and culture. Especially for non-domestic service providers, Europe’s collection of relatively small different countries can be a tough nut to crack. This may explain why a lot of offshore outsourcing in Europe is performed through service providers that have a large local presence. Research performed by Quint Wellington Redwood has shown the hurdles for Indian providers without a historic presence in Europe to enter this market. At present, most large European companies have an off shoring strategy, but still have a long way to go to harvest its full potential. [Alex van den Bergh, 2011]

The recent European crises have also ensured that there will not be any large scale increase in IT spending. Most of the firms have huge IT deployment that is managed by in-house teams. Any major radical shift would impact employees and hence, they focus only on discretionary spending. That too, when they make sure the employees would be absorbed in other jobs.

However, most European and multinational service providers have now surpassed critical mass of their offshore delivery centers and a large number of Indian service providers are reaching critical mass in local delivery centers within Europe [Alex van den Bergh, 2011]. Even midsized and smaller players in Europe rely on offshore delivery. Market dynamics for offshore outsourcing in Europe are, therefore, expected to change significantly in the coming years. Many companies in the European region engage in staff augmentation or local delivery instead of offshore (or near shore) outsourcing [Alex van den Bergh, 2011]. Now that offshore outsourcing has entered its fourth decade of growth, these companies under pressure to optimize cost, are advised to realign their sourcing strategy and see where and how it can be applied to successfully align with their business goals. Either way, for the decade ahead, Europe will likely see a continued growth in use of offshore outsourcing.

Europe has always been a challenge for Indian IT companies. Apart for TCS, no major Indian IT company gave so much attention to region Europe as it is getting in recent months. Before 2008, most companies did not have any clear long term strategy or vision apart from week front office. Additionally, they were too short term in their approach. As soon as their employees landed in the market, they began chasing deals and instant results. Probably, utilizing their learning from assignments in America, where the business culture is different from Europe [Khurana, 2013]. Building up key networks, understanding trends and social atmosphere of the market that are so crucial in bringing busi]ness from new market were more or less ignored by these onshore employees. They failed to show themselves as local players with local employees. Recent political uncertainties, currency fluctuations and economic recessions have made the going somewhat even tougher for most IT firms in the European markets [Khurana, 2013]. Top IT companies have seen a drop in the share of business from Europe in the second quarter ended June 2010. Infosys saw a sequential drop in revenue to $275.7 million in the second quarter ended June 30, 2010, from $291.6 million in the previous quarter. Wipro's revenue has come down marginally to $305.7 million from $306.6 million. For HCL Technologies, business from Europe has dropped to 24.6 per cent from 26.7 per cent. On the other hand, Tata Consultancy Services (TCS) has reported an increase in its share of revenue from Europe to $430.6 million from $424.9 million. Cognizant, too, has shown a rise of 15.3 per cent in its revenue from Europe to $200.17 million from $173.63 million.

For majority of the Indian IT companies operating in Europe, close to 90% of the revenues come from the UK with the rest coming in from other geographies such as Germany, France and the Nordics. The key challenge for domestic software companies in making headway into continental Europe has been the language and cultural barriers.

Europe is a leader in manufacturing exports, and many of these manufacturing companies are looking for expansion, overseas as well as within Europe. These manufacturing firms have traditionally kept the IT functions in-house. But, as they expand, there will be a requirement of optimizing, scaling of functions as well cost cutting.

The opportunity that this expansion will create, along with the weaknesses of Eastern Europe (near shore) in terms of sourcing location provides a perfect platform for Indian companies to capitalize and create a strong hold in the region.

Rationale of Research

Europe has always been a big challenge for Indian information technology firms. Though, the potential market size of EU is in comparison to the US, the challenges it offers in terms of diverse and complex business environment has made it very difficult for companies to achieve any significant success.

The events of recent economic crises have made the Indian IT firms to re-look at their business strategies. To sustain the competitive advantage, that Indian IT industry has build over the years, requires a change in terms business models, talent acquisition, geographical reach and range of services offered. Off shoring is at a complicated stage, because countries like China, Philippines, and Latin America are emerging. Therefore, Indian companies can't compete on price anymore. They must look at smarter ways of being competitive and how to keep the growth going. They also need to understand that labor arbitrage won't take them any farther. Factors like weakening rupee, high production input prices, hike in borrowing costs, and geo-political situation continued to plague the industry in 2012.

On this backdrop, Europe provides a perfect platform for Indian companies to diversify and move up the value chain. Europe provides all the necessary challenges which if countered with right strategy can prove instrumental in sustaining the Indian IT industry’s competitive advantage. Moreover, it will also aide in building competencies which will enable firms to give a strong competition to IT global giants.

The research serves as a means to understand how Indian IT companies are reacting to the challenges and huge market potential in continental Europe. This research looks into the strategies adapted by the companies to leverage their existing resources and bring changes in respective business models to bring sustainable gains from continental Europe in long term.

Research Objective

The objective of this research is to find out about the strategies which the Indian IT companies have adopted or planning to adopt in future to tap the European Information Technology services and outsourcing market.

Research Methodology

In order to obtain results as per the stated purpose, the author have done an extensive literature review search in the e-journals databases: ABI/INFORM Complete, EBSCO Business Source Complete, Emerald Management Xtra and Science Direct. Below are the academic and research papers used for the literature review.

Alex van den Bergh, Ronald Israels, "A decade of offshore outsourcing to India" ,Sourcing, White Paper

Peter Schumacher and Eric Olsson, "European IT companies in India", Value Leadership Group

Philip M. Parker, "The 2011-2016 Outlook for Information Technology (IT) Services and Outsourcing Services In Europe", INSEAD

Divya Satija, Prof. Arpita Mukherjee (2013), "Movement of IT Professionals between India and the EU: Issues and the Way Forward", IIM Banglore

Daisy Mathur Jain, Reema Khurana, (2013),"Need for sustainable global business model in software outsourcing: The Indian perspective", Business Process Management Journal, Vol. 19 Iss: 1 pp. 54 - 69

Christopher Clott, (2007),"An uncertain future: A preliminary study of offshore outsourcing from the manager's perspective", Management Research News, Vol. 30 Iss: 7 pp. 476 - 49I

Subahsh Bhatanagar "Indian Software Industry", IIM Ahemdabad

Over and above these papers, NASSCOM reports, survey, McKinsey Quarterly reports, leading business magazines and newspaper articles were also referred for literature review. Finally 42 references listed at the end of the paper were used for analyzing the strategies and approaches adopted by Indian IT companies specifically for European markets. Additionally, interviews transcripts of senior executives of the companies were also referred to gain further insights into implemented strategies

Analysis and Discussions

Strategies for Europe

Europe as a market for information technology services and outsourcing cannot be ignored by Indian IT industry. The market potential is huge as shown by the figures below.

C:\Users\aditya\Desktop\20130119_SRC587.png

Figure : European Companies’ outsourcing by department percentage

Source: The next big thing, Special report, The Economist, Jan 2013

Europe is a large spender on information technology, but domestic companies have found it difficult to grab significant spoils there because of regulatory constraints and cultural differences.

Figure : Market potential for Information Technology Services and Outsourcing Services in Europe

Source: The 2011-2016 Outlook for Information Technology (IT) Services and Outsourcing Services in Europe, Philip M. Parker

The big Indian IT companies have clearly identified France and Germany as focus markets and finally decided to deploy the required strategy.

Localization - Hiring local talent and local Competency Centres

 TCS ranks among the Top 15 IT services players globally. However, it ranks 35 in the German IT services market. This is now set to change. At the corporate level, TCS has determined Germany as one of its strategic growth markets and has committed significant resources and investment towards strengthening its operations in Germany.

A key aspect in this is the adaptation of its global strategy to local market requirements. For example, TCS is adapting its service portfolio by developing customer- or industry-specific solutions for the local market. Similarly, specific portfolio elements, such as SOA Agile or SAP-related solutions, will be pushed especially in the local German market. Local sales and delivery capabilities are also being adapted. TCS has recruited a range of experienced German nationals to develop client relationships and foster local account management. [Grimme, PAC Blog, 2011]

The existing delivery center in Duesseldorf (with c. 100 consultants) has become a competency center for Agile development and key technologies and is intended to act as an incubator for industry-specific centers of excellence. It is integrated closely with TCS’ Global Delivery Centers in Budapest (for Europe) and India. In Walldorf, TCS has established a Center of Excellence for SAP services and is leveraging its established strategic partnership with SAP to increasingly drive co-innovation projects. An example is the TCS SAP HANA Center of Excellence that is intended to offer mobility solutions for the retail, CPG and other industries. In the future, TCS envisions joint go-to-market initiatives with SAP. With a total of approximately 7,000 SAP consultants, TCS is well positioned to combine local innovation with global (offshore) delivery of SAP services.

With the consequent focus on this localization strategy, it is expected that TCS will increasingly become an attractive proposition for large and upper mid-market organizations in Germany. TCS, with this localization strategy seeks to be successful in substantially increasing its IT services market share in Germany over the next years. [Grimme, PAC Blog, 2011]

Infosys Technologies is also trying a similar strategy to tap the continental Europe. This involves increasing local workforce base for sales, marketing and consulting, even as technical and engineering services would continue to be carried out from low-cost centers such as India and China. Infosys is looking at non-English speaking countries differently. They have started with France and Germany, two most critical markets in Europe, where they will have significant local presence. Infosys plan to use France and Germany as a base that will allow them to provide a local front to customers with an India or China back-end. [Sharma, DNA, 2010]

To penetrate the German market, Wipro plans to tap into the experience and understanding of its board member, Henning Kagermann, president, Acatech (German Academy of Science and Technology). Kagermann joined the Wipro board in 2009.

"Kagermann profile is impressive as he was the CEO of the enterprise software maker SAP AG till 2009 and is currently a member of the supervisory boards of Deutsche Bank AG, Munich Re, Deutsche Post in Germany and Nokia Corporation," notes Kurien.[Ghosh, FinancialExpress, 2012]

Other firms like HCL, Cognizant etcs are also working on similar lines. The firms are hiring lot local consultants and senior executives in order to show themselves as local players with local employees.

Acquisitions and Strategic Partnership Growth

Indian IT companies are usually cash rich, sometime to an extent of being accused of maintaining very high liquidity. Moreover, challenges in Europe business environment lays a platforms to invest in joint venture and strategic partnerships. In recent years, Indian firms have become more adventurous when it comes to investments and the latest target on their agenda is to explore the European markets.

TCS has recently signed a multi-million multi-year deal with Dutch company Royal Haskoning, which selected TCS as its strategic technology partner. As part of this engagement TCS will provide end to end Infrastructure services to Royal Haskoning from its delivery centers in the Netherlands, Hungary and India. It is an extremely strategic initiative for Royal Haskoning, which will create an operating model that will provide the platform for growth in Europe and in emerging markets. Secondly, it consolidates TCS’s position as a full services player in Europe, marking the expansion of its capabilities from its core business of application services towards strong capabilities in Business Process Outsourcing (BPO), Consulting, Engineering Services and, as in this case, Infrastructure Services. TCS is also looking at inorganic growth in the European market, A.S. Lakshminarayanan of TCS insists that "If any acquisition is made in the future, it will not be done to attain scale or size, but it will only be done for extremely strategic reasons - such as access to new markets, capabilities and clients that the company does not currently have." [TCS Press Release, 2011]

The Indian IT outsourcing giant Infosys is also looking for its largest-ever acquisition – the $350m pickup of Swiss SAP systems integrator Lodestone Holding. The purchase will helps the company shore up its higher-margin consulting business while also increasing its presence in Europe.[Venkatesh, 2012]

HCL Tech is among the few Indian IT players which have used inorganic strategy so effectively. Its acquisition of European enterprise applications player Axon in 2008 has helped in clinching some of the large projects in the enterprise segment over the last few quarters.[Venkatesh,2012]

Wipro is also not far behind and is exploring the possibility of acquiring a firm in Germany, the world's second-largest IT market. Wipro senior management has mentioned that they aggressively looking for an inorganic route as Germany is currently generating only about $100 million in revenue for Wipro. The company's top management feels this is too miniscule a share given the size of the German IT market, only next to that of US. Wipro has done numerous acquisitions in Europe but never in Germany. Some of the European companies acquired by Wipro in past were NewLogic, Saraware, Enabler, which were based out of countries like Austria, Finland and Portugal. [Ghosh, FinancialExpress, 2012]

Movement of IT professionals between India and the EU

The IT/ITeS sector is highly skill intensive. The expansion of knowledge-based industries especially the information and communication technology (ICT) industry in the EU has led to an increase in demand for high skilled IT professionals. At the same time the EU is facing shortage of labour due to a huge ageing population (European Commission, 2006). India with a young and qualified manpower complements growing skill requirement in the EU. These mutual complementarities have accentuated cross-border movement of IT/ITeS professionals, especially Indian professionals to the EU, and presence of Indian and EU companies in each other’s territories. While Indian IT professionals are in high demand in the EU to offer business development, onsite project delivery and maintenance services, the EU companies bring professionals to India for training Indian workforce and leading offshore units, research and development (R&D) centres, captive units, etc. among others.[Satija,2013]

This strategy has worked in the past with US, there has been some roadblocks while implementing this for Europe. But, firms have realized and acknowledge the complexity of European business environment. TCS, Infosys, Wipro are training and hiring employees in line with this strategic approach. However, this strategy depended a lot on government policies and regulations governing the movement, social security etc of foreign professionals within a country. NASSCOM has been actively contributing to EU Public Consultation on future trade policy [NASSCOM, 2011]. There has been very healthy bi-lateral trade discussion between India and countries like Germany, France and Nordic countries in recent past. There are many processes like ‘Blue Card’ and ‘Single Permit Directive’ which will prove to be conducive to information technology exchange between Europe and India. This will definitely prove beneficial to both large players like TCS, Wipro etc as well as to tier II players Patni, Zensar etc.

Below table clearly suggest that there is a shortage of local labors and required skill set in most countries in EU as compare to India.

Table : Ranking of Indian vis-à-vis other countries for People Skills and Availability

Country

2007

2009

2011

United States

2.74 (1)

9.03 (1)

9.60 (1)

India

2.34 (2)

8.26 (2)

9.20 (2)

China

2.25 (3)

7.76 (3)

8.51 (3)

United Kingdom

2.16 (5)

7.08 (4)

7.55 (4)

Germany

2.19 (4)

6.99 (5)

7.23 (5)

France

2.07 (7)

6.77 (6)

7.05 (7)

Spain

1.71 (8)

6.33 (7)

6.85 (9)

Ireland

1.54 (11)

5.21 (10)

5.79 (12)

Poland

1.17 (24)

4.07 (20)

4.25 (23)

Hungary

0.95 (40)

3.36 (29)

4.15 (25)

Czech Republic

1.10 (28)

3.79 (25)

3.79 (29)

Portugal

1.14 (26)

3.35 (26)

3.63 (30)

Romania

0.87 (45)

3.02 (36)

3.42 (32)

Estonia

0.96 (37)

3.10 (32)

3.18 (33)

Latvia

0.91 (41)

2.86 (40)

3.11 (37)

Lithuania

0.83 (48)

2.69 (42)

3.10 (38)

Slovakia

1.04 (30)

3.13 (31)

3.10 (39)

Source: Compiled from AT Kearney Global Services location index, various Issues [Working Paper No. 391, IIM Bangalore]

Notes:

Numbers in brackets indicate the rank of a particular country in the respective year.

Lower the rank better is the performance of the country

The index covers 50 countries and to calculate these scores each country was evaluated against 4 metrics namely: relevant experience, labour force availability, education and language and attrition rate.

Limitations

Author approached the Senior Managers, who were handling projects dealing with European client of some Indian IT companies. But, some of them refuse to divulge any details of adapted strategy in view company or client privacy policies and guided the author to the interviews given by the company’s representative to print media. Some managers did not respond positively to the author’s request.

It will be interesting to see how the mentioned approaches are being strategically implemented. It will also be of great interest to know the challenges companies are facing at the grass root level while implementing the strategy.

Also, since this can be considered as shift in the business perspective of the companies, it will be very interesting to see the results of the adapted strategies in the coming years.

Suggestion for future research

Future research can be done after seeing how companies come out as a result of this adapted strategies. Author believes that this will the turning point in the Indian IT firms, there will be some drastic changes in the business models which will enable firms to drive more value to itself as well its clients.

To evaluate the effect of this change in business perspective of Indian software companies will prove to be an interesting research topic.

Conclusion

Europe will be the region to show the greatest growth in off shoring to India. To realize this growth potential, Indian must retain its advantage over other global sourcing locations such as South America, Eastern Europe and Asia Pacific. It is imperative for industry stakeholders to break out of traditional mould that resulted in past successes.

The new route adapted by Indian companies to tap European markets, seems to set a solid base to enable them to sustain its competitive advantage in coming years. Europe’s culture and language constraints demands for effective localization strategy. The companies in Europe has world class competencies and Indian companies have unmatched scale and experience. The advantages of these complementary characteristics can lead to long term benefits for both European as well Indian IT firms. Moreover, it can also lead to extend the reach and range of services to new geography and industry verticals.

Localization, acquisitions, joint venture and movement of professionals adopted by the Indian Information technology industry seems to be an appropriate long term strategy. This will not only help in capturing European markets but will also further strengthen the position of Indian in global perspective.

These strategies will prove conducive for Indian IT companies to move up the value chain and contribute as a strategic partner to their clients rather than just being an IT vendor. It also provides an opportunity to leverage high-margin business consulting capabilities and compete with global MNCs. There will be gradual shift from onshore – offshore model. IT companies will seek to find something close to a near-shore while balancing the cost and high quality services, which will be in line with to the local client expectations.