Indian suppliers are mopping up Nordic business
Indian IT suppliers are blazing a trail in the Nordic region with large deals and major local investments
India-based IT suppliers are winning contract after contract in the Nordic region and leaving large footprints in the process, which can only mean more will follow.
In recent weeks, there have been major outsourcing deals announced in the region, with Indian suppliers claiming a huge chunk of them.
For example, HCL made its acquisition of Volvo’s external IT services arm (Volvo IT) official in February 2016. The deal saw around 2,600 Volvo Group staff – most located in Sweden – offered employment by HCL.
HCL also announced a deal with Swedish power tool maker Husqvarna to provide IT infrastructure and application services.
In addition to the Volvo IT takeover, HCL increased its footprint in the region with a delivery centre in Norway and another in nearby Baltic country Estonia.
HCL is not alone, with fellow Indian tier one supplier Wipro also cementing deals in the region.
In November 2015, Norwegian supermarket group Coop signed a five-year infrastructure and managed services agreement with the supplier. Meanwhile, Swedish lock manufacturer Assa Abloy is moving to a cloud-based service model under a five-year IT infrastructure outsourcing deal with Wipro.
Peter Schumacher, director at business consultancy The Value Leadership Group, said Nordic firms have lost their way. He added that it is not dissimilar to when the US giants allowed Indian firms in under the radar, when big business craved low cost IT support amid Y2K fears.
“In response to the advancing offshore firms, Nordic firms have been retrenching, delisting and focusing on operational excellence and localisation. Today, most firms are boxed-in and even more strategically disadvantaged,” said Schumacher.
Read more about outsourcing in the Nordics
- Headlines about Indian IT service providers securing high-profile outsourcing deals in the Nordics have become commonplace.
- Norway’s Coop becomes the latest Nordic firm to outsource IT to an Indian company after the retailer penned a deal with Wipro.
- Around 600 Evry staff in the Nordics are to move to IBM in $1bn IT outsourcing deal that sees the firm hand over its IT infrastructure for the next 10 years.
He added that Tieto’s revenues for example are down 20% since 2008, while leading offshore-based IT services firms have at least doubled their European revenues.
“European firms have failed to build advantages, rather than just eliminate disadvantages. Most have fallen behind on the change curve and remain trapped in outdated business models, practices and paradigms.”
Ajay Davessar, global communicates head at HCL, told Computer Weekly that – while Europe is the company’s fastest growing region in terms of business – the Nordic region is the fastest in Europe.
He said the Nordic region is being set up as a hub for mainframe skills that will target customers that still rely heavily on robust mainframe environments. These include financial services, utilities and heavy manufacturing.
Growth in the Nordics
HCL’s acquisition of Volvo IT gives HCL mainframe resources that will create a platform for further growth in the Nordics and other European countries.
HCL has an impressive list of customers based in the Nordics, including Electrolux, Statoil Vestas, UPM Kymmene, OP Pohjola, Nokia, Husqvarnam, Volvo, DNB, Ikea, and Danfoss.
In 2014, Gartner research analyst Mika Rajamäki told Computer Weekly: “Based on 2013 figures, Indian IT suppliers have been growing faster in the Nordic market than the traditional service providers.
“If the annual growth of the traditional suppliers has been 2% to 3%, Indian companies have been growing by almost 20% a year. What Indian suppliers do very well is to rapidly take over a customer and invest in the relationship,” added Rajamäki.