Indian offshore service providers are now posing a serious challenge to continental European competitors, as enterprises across Europe increasingly seek to take advantage of global sourcing, said analyst Gartner.
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Unlike enterprises in the US or UK, continental European countries have been historically more reluctant to engage with offshore providers to support their business needs, because of political sensitivity, labour laws, language requirements and cultural compatibility.
Globalisation however is spawning new competition that European companies can not ignore, said Gartner.
In the last months of 2006, leading offshore providers in India released quarterly earnings announcements that signalled strong earnings in Europe.
Despite these providers not specifically disclosing major client wins in Europe, these earnings announcements show how Indian service providers have achieved traction in the traditionally difficult continental European market, said the analyst.
They also demonstrate how, especially outside the UK, few European organisations are comfortable with the idea of publicly announcing the use of offshore outsourcing. This is because European business leaders still worry about offshoring’s effect on their company's workforce and image, said Gartner.
“Tier 1 Indian offshore providers, without exception, have recorded outstanding growth rates since the first quarter of 2006. The three largest (TCS, Infosys and Wipro) have recorded year-on-year growth of more than 40%, while Cognizant has enjoyed a 60% growth rate,” said Gartner analyst Claudio Da Rold.
“Although the US is still the largest market for these companies, their European divisions have shown the strongest growth, thanks to strong acceptance in the UK and an increasing number of customers in continental Europe,” she said.
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