• WNS acquired auto insurance claims processor, Call 24/7 Marple based in South Manchester, UK.
• EXL Services recently announced plans to expand its operations in Eastern Europe and Romania via acquisitions.
• FirstSource Solutions received £6.7 m of Government support to scale up operations in Northern Ireland. FirstSource has centers in Belfast and Londonderry.
• Cognizant recently signed a contract with AstraZeneca to provide electronic support to its R&D operations, data management planning, and medical coding.
• As part of a recent contract, TCS will provide R&D services to Nokia Siemens Networks in Germany. The deal involves transfer of product engineering and R&D services and parts of the operations and business software business unit activities from Nokia Siemens Networks to TCS.

Apart from the above instances, there have been investments by HCL, Tech Mahindra and Polaris in Ireland. Infosys has expanded its presence in the Czech Republic, while Wipro is planning on growing its presence in Romania.

The expansion of Indian vendors towards Europe is not a new phenomenon, however renewed interest and greater momentum is more evident than before. Most of this is driven by the motive to capture the European market opportunity ahead of others, given the instability in the US market and the rupee appreciation against the dollar in the last year. Other drivers include proximity to clients and multiple language capabilities, which cannot be achieved from India.

Almost all the leading Indian vendors have not just a marketing front end, but are also looking at delivery centers in Europe more aggressively.

According to TPI, the average value of contracts in the US is €123 m, a 38% decrease over the last year. On the other hand, the average size of contracts in Europe is €198 m - a 35% increase over last year.

Destination Europe

Amongst the prominent EU countries UK, Germany, France, Finland, Switzerland and Netherlands have a higher concentration of BPO customers whereas the emerging offshore vendor destinations include Romania, Czech Republic and Hungary among others. Ability to provide relatively low cost resources and government initiatives in some instances has propelled these counties in the limelight. In order to attract investments, the Irish Government is providing grants in addition to low corporate taxes to companies investing in technology and infrastructure. While Ireland is relatively more mature in terms of offshoring, there are other destinations that are emerging within Eastern European countries.

Some of the European Union countries like the Czech Republic, Poland and Hungary can provide labor arbitrage in the range of 40 to 50% below the costs in Western Europe. Moreover, the wage inflation in these countries ranges between 3-15%. However the manpower pool is limited from the perspective of scalability. Some vendors do opine that these destinations score highly in terms of manpower quality. However, this is a jigsaw that the vendors will need to work out based on their growth plans in various services and the growth in type of clientele.

Characterized by a variety of cultures, languages and diversity of customers, Europe is no cakewalk for Indian vendors setting up centers there or catering to European clients. A regulated market, country-specific regulations and limited human resources compounds the problem of setting up offshore centers that are cost-effective and scalable. However with a business imperative that is taller than the issues, there is no stopping the Indian outsourcing tirade in Europe.