JOIN USIndian IT has realised that hiring locals will not only give them an upper hand in crossing the language barrier, it will also be easier to get to know the local market metrics.
The Indian IT (Information Technology) industry is expanding its presence in the European market by hiring people locally, to understand the business environment better.
Infosys has exactly done that by employing 1,000 people in the quarter ending December, 2011 trying to get better foothold in the European countries, taking a cue from the increase in revenue generation to 22.6 per cent from Europe in the December 2011 quarter as compared to 20.5 in the quarter ended September 2011. “Local recruitment is very important from the point of view of local domain expertise,” said Infosys CEO & Managing Director, S D Shibulal.
Europe seems to be a lucrative market for Indian IT companies as they are bagging more number of deals than they did previously. Infosys believes that European market is going to present much more opportunities in the near future.
“I think, with all the challenges in the global economic environment, client focus on efficiency is going to be high and could increase offshoring. Europe could grow faster than US because the level of offshoring in Europe is still much lower than US,” said Infosys CFO V Balakrishnan at its Q3 earnings call.
Wipro is also aggressively recruiting in Europe. The company stated that 28.2 per cent of their revenue for quarter ending December 2011 came from Europe and they have witnessed 12.2 per cent YoY growth in Europe on constant currency terms. “Europe is a land of opportunity and the market there is going to open even further” said Wipro CEO T K Kurien at the company’s Q3 result.
Cognizant has a global recruiting model. In each of the geographies they operate, they have a recruiting team to hire talent locally, both from educational institutions and from lateral market. “In Europe, in addition to hiring across geographies, Cognizant has augmented its local presence through acquisitions and alliances. Both the acquisitions Cognizant did last year—PIPC, a programme management company based in London and Galileo, a testing consulting company based in France—were in Europe,” said Senior VP Corporate Marketing, Research & Communications R Ramkumar.
Cognizant has established strategic alliances with companies such as T-Systems in Germany, Ordina in Benelux, and Visma in Nordics to complement its capabilities to help European customers build stronger businesses.
As a six-month-old startup, Happiest Minds is seeing emerging opportunities in the areas of disruptive technologies such as Cloud, Mobility, Social CRM, Analytics and Security and already has an office in the United Kingdom and is in business discussions with UK based companies.
“Europe is undoubtedly an important market for Happiest Minds. Europe is a mature market and even though large part of business comes from UK, there are other untapped regions in this market,” said Happiest Minds CEO, Vikram Gulati.
However, he added that the fear of an impending recession on the account of falling euro has made companies cautious to tread carefully in this market.
Nasscom believes that European market is very much under-penetrated since 50 per cent of the European business comes from UK alone. “Even though there are concerns about the European macroeconomic environment, Indian companies are sure to do well owing to their productivity and efficiency,” said Nasscom Vice-President Ameet Nivsarkar.
Companies are looking forward to local hiring in Europe because it will help them cross the language and cultural barrier as well as getting access to the local market with the help of locals who know the market better, he added. HCL Technologies recently announced that it will create 10,000 local jobs in Europe and US in the next five years.
“Clearly, the need of the hour is growth and employment and we believe that this initiative will create unique business value for HCL while generating sustainable employment in local economies for years to come,” HCL CEO Vineet Nayar said at World Economic Forum, Davos.
Based on this initiative HCL has embarked on a series of initiatives, running dedicated recruitment and training programmes for college graduates and providing platforms for developing IT skill pool in local communities through collaboration with anchor customers and universities.
In the months ahead HCL will be working with 12 universities to offer a six-month elective course - as well as workshops on technology and management. HCL’s technology partners will also join hands in this initiative to provide training in upcoming technologies so that the talent deficit in these areas gets addressed.
“It will need significant collaboration of all stakeholders, however we do believe that it can be done and we are committed to backing this programme with all our resources and best intent,” Nayar added. HCL also said that in locations like Helsinki in Finland, Krakow in Poland and Dublin in Ireland, they have already seen early signs of success.
Land of opportunity
According to the TPI index released by Information Services Group shows that the Europe, Middle East and Africa zone (EMEA zone) has become one of the fastest growing markets of late and with mega deals coming their way in 2011, the EMEA market jumped 27 per cent to $55.30 billion and total number of deals rose to 397 up 20 per cent.
The American continent market, on the other hand, at $31 billion was down 20 per cent. The report said that now outsourcing activity in EMEA was not limited to the established markets of the United Kingdom, Germany and Scandinavia, with momentum seen in France, Southern Europe and the Middle East.
iGATE Patni CEO Phaneesh Murthy said that local hiring is a market reality and it’s becoming increasingly important because companies are facing too many hurdles in immigration and free mobility.
“Europe is the fastest growing economy for us and the outsourcing market there will see a surge as they decide how to do things in a cheaper way,” added Murthy. Murthy also announced that one of their major deals this year have been in Europe.
Among the European countries, UK leads the outsourcing market with 70 per cent of the work outsourced and the market is estimated to be around $11 billion.
Certain hindrances
“Indian companies take the lead in UK mainly because of the uniformity of the language spoken,” said Partner at Information Services Group, Sid Pai.
He explained that even though language is the main issue there are a couple of others. One among them is the presence of already established local employers like T Systems in Germany which poses a competition for the newly coming Indian companies. So the competition is not only from Indian IT MNCs, but also from local competitors.
Another reason that Pai stated was the presence of Acquired Rights Directive (ARD) in European countries. According to this directive, if a company outsources work then it has to compensate its employees, whose part of work is now outsourced. This deters many EU firms from outsourcing work. However, these are just barriers the Indian companies must keep in mind while foraying into European market.