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Why Europe, not US, holds key for Indian IT firms


New Delhi, Dec 30: North America may account for the lion's share of India's IT exports but growing demand for outsourcing services from Europe is expected to drive the $108-billion IT sector in 2014, according to industry body Nasscom.

"Europe is growing faster than the US. That is something we saw this year and this will only gain momentum. There is a lot of latent demand in the region, which will drive growth for the sector," Nasscom president Som Mittal told PTI.

North America accounts for over 60 per cent of revenues of Indian IT exporters, while the European region contributes about 20 per cent with the UK making up for the bulk of that share.

"The share of the European region has been growing... The market is now more open to outsourcing and in the coming year, we will see a lot of new projects coming up, which is a huge opportunity for our domestic companies," he said.

Europe is growing faster than the US. That is something we saw this year

Indian IT companies are also ramping up presence in Europe as they face uncertainty in the US market, where new immigration laws could drive up costs of sending workers on short-term visas.

"The companies are bullish on the European market, which is evident from the acquisitions that some of them have made in the recent past," he said.

Indian companies have also been acquiring local firms to address labour issues and increase pace of growth in Europe.

These include Tata Consultancy Services' (TCS) acquisition of French IT services firm Alti for Rs. 530 crore, Geometric acquiring 3Cap Technologies for 11 million euros and Infosys buying Swiss consulting company Lodestone for $350 million last year.

US-based Cognizant, which has 75 per cent of its workforce based in India, acquired six small IT services companies (part of Germany's C1 Group) for an undisclosed sum.

"For European companies, many of them which have seen prolonged economic slowdown, Indian IT firms not only offers cost advantage but also high quality of work," Mr Mittal said.

Nasscom expects the domestic IT sector to grow by 12-14 per cent, while IT exports are likely to reach $86 billion in the current fiscal year ending in March, 2014 on the back of adoption of new technologies and tapping new geographies by corporates.


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