• HCL BPO Services bagged a five-year BPO contract from LexisNexis UK and Ireland. As per the contract, services such as contact center, back-office, and online services will be offered to UK-based and Irish legal, tax, accounting, and corporate clients of LexisNexis.
• TCS won a seven-year IT helpdesk operations contract from Somerfield, a UK-based supermarket chain. TCS had earlier acquired BPO division of UK based Pearl Group.
• Infomedia bought a 100% stake in UK-based publishing BPO Keyword Group.
• UK based retailer, DSC International awarded a $330 million IT contract to HCL Technologies.

UK Companies Offshoring to India

The lure of India's low-cost, qualified workforce has been highly attractive for businesses in the UK, particularly given that business and cultural legacies (legal system, judicial system, accounting system) make it easy for Britishers and Indians to work together. Already outsourcing/offshoring has helped UK become one of the strongest economies in Europe.

In recent months, this trend (Outsourcing from UK companies to India) continues unabated, just going by the announcements by large and small British companies. While India will remain the most favored offshore destination for UK companies, near-shore destinations like Ireland and some Central and Eastern European countries like Romania, Belarus, Hungary and Poland are also benefiting from the wave of outsourcing from the UK.

Future Outlook

While the US remains the dominant market for the Indian vendors, revenues from Europe are gradually increasing. The Indian IT biggies already earn nearly one-fourths of their revenues from Europe (out of which, UK takes a significant share). Infosys, TCS, Wipro, WNS, Zensar, Satyam and Genpact are some of the significant Indian players offering services in the UK. Almost all the large Indian vendors have operations in the UK, while the smaller players are gradually building their marketing presence. The Indian vendors are rapidly looking at penetrating into the UK market by way of acquisitions. Vendors such as Wipro and Triton Corp are planning to acquire companies in the UK and Europe.

We expect a larger number of UK companies in segments such as Banking and Financial Services, Insurance, Legal services, Retail and Telecom to seriously consider the offshoring option. Meanwhile, several Indian vendors who were already training their focus on UK will do so more aggressively given the depreciating dollar revenues.

In some of the emerging knowledge service segments, the India/UK cultural synergy means that UK companies are actually pioneering offshore initiatives. For example, one of the largest legal services outsourcing contracts has originated from British law firm, Clifford Chance. Though Integreon will act as a back office for Clifford Chance and will also offer accounting services and IT functions, we believe this is only the beginning and law firms will soon get more comfortable with the idea of offshoring. Publishing is another area, where British firms have been pioneers. For instance, MacMillan began offshoring of STM publishing way back in the seventies.

We believe the UK will increase its share of India's offshoring revenues over the next three years, given British business' relatively open attitude towards offshoring, aggressive marketing investments by Indian vendors, and last but not the least - the curry factor!

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