Indian IT outsourcers want a bigger byte out of Europe

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SummaryIndia's IT outsourcers, long bit players in continental Europe, are looking to win over more people like Hans-Petter Aanby.

India's IT outsourcers, long bit players in continental Europe, are looking to win over more people like Hans-Petter Aanby.

Aanby is chief information officer of Scandinavian Airlines System, which recently awarded Tata Consultancy Services (TCS) a five-year contract worth over $160 million as part of its effort to halve information technology costs and reduce local IT staff by 70 percent by 2015.

Big Indian IT companies, heavily reliant on the US market and eager to diversify, have intensified efforts to crack continental Europe in the past three years through acquisitions, setting up operations on the ground and hiring locally.

The push into Europe comes as Indian IT vendors face uncertainty in the United States, where more restrictive rules that could drive up the costs of sending workers there on short-term visas are being debated as part of an immigration law overhaul. The rise in revenue from Europe is likely to be reflected when earnings season for the sector kicks-off on Friday with no. 2 player Infosys Ltd's results.

NelsonHall, an outsourcing advisory firm, expects the four top Indian vendors and US rival Cognizant Technology Solutions - which has three-quarters of its staff in India - to see overall business in Europe grow about 16 percent this year. It expects 12 percent growth in the United States.

Europe accounts for roughly one-third of revenue for India's $108 billion IT services industry, although Britain has long made up the bulk of that share. In continental Europe, Indian IT firms are making their deepest inroads in northern European countries where English is widely spoken.

However, language barriers and tight labour rules mean Europe is yet to surpass even Britain as a revenue source for Indian IT firms, which are expected to rely on acquisitions to build up their offerings in big markets such as France and Germany. India is also not yet compliant with a European data privacy directive, which limits some of the work that can be moved to the country.

"Europe has been a very conservative market compared with the US," said Sharat Kumar, head of delivery for Europe at No. 5 Indian player Tech Mahindra, whose European clients include food giant Nestle SA and aerospace firm EADS .

"The customers are conservative in starting the initiative, but once they do, these are the customers that don't just go back and forth or drop it, so what we've seen is that there

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