November 18, 2011: Even though the European market is down, the Indian information technology service providers have realized that Europe is a land of opportunities for them. It is evident from the huge contracts that Indian companies have secured and the huge investments they are planning to make in Europe.
The largest Information Technology service provider, Tata Consultancy services (TCS) have entered into a deal with pension provider based in the United Kingdom, the Friends Life. The deal is worth USD 2.2 billion, one of the biggest deals that TCS has ever signed with a client. It is said that TCS is engaged in talks with the popular airliner, Lufthansa, to acquire a considerable stake in the airliners Information Technology business, the Lufthansa Systems.
If the deal is realized then it will be a major win for Tata Consultancy Services in the Europe. Sources close to the company says that the value of the deal will be in the range of 2 billion US dollars. More over this will give TCS a strong base in the European region. Europe is hit by debt crisis and is in a stage of uncertainty, the Indian IT firms with contracts in the region has been able to make steady progress.
TCS is now considering Europe as a market of strategic importance. Out of the total business with TCS, Europe contributes 25.6 per cent, with Britain contributing 15.5 per cent and the rest of Europe contributing 10 per cent.
Other IT service providers such as Wipro, Infosys, HCL etc has also shown marked growth in the region. Infosys has entered in 10 new contracts with European clients as on September 2011. In the case all the leading IT players 25 per cent of their revenue comes from Europe. In the case of Wipro, Europe contributes 28.8 per cent of its revenue; in the case of Infosys, Europe contributes 20.5 per cent of the total revenue; and in the case of HCL, the contribution from Europe is to the tune of 26.6 per cent.
In the case of most of the leading IT service providers, they have adopted an inorganic approach in Europe to grow. In the case of TCS, it had expanded by means of acquisition. In the case of Wipro and HCL, both of them adopted an inorganic approach for expansion in Europe.
In the case of TCS, it has made investments in Europe with the intention of long term returns. This has created a strong platform for them in Europe which will help them to expand their market share in the region. A report published recently suggests that TCS is considered as the most preferred service provider by many of the leading banks in Europe.
Among the IT players that have entered the European market, only TCS and HCL were able to make an impact with their acquisitions.