Infosys' Europe strategy picks up steam

India’s second-largest information technology (IT) services provider, Infosys, said its strategy of having focused local leaders to head operations in Europe is helping the company grow faster in the region.

B G Srinivas, member of the board, head (Europe operations) and head (manufacturing), believes while Europe remains a significant and crucial geography for the firm, the pace of growth there would be slower than the US markets. He also said so far, the company had seen no delays in projects or pricing pressure from clients in Europe.

Last year, Infosys had announced the appointment of local heads to manage its business in the two largest IT markets in Europe—France and Germany. After the initial success, the company believes this would be one of the strategies it would emulate in other European countries as well. The company plans to hire 500 consultants, project managers, programme managers and enterprise architects across Europe in the next 15-18 months.

“In Germany and France, we have seen the growth momentum picking up significantly and have grown 50 per cent annually. We have not only expanded our service footprint, but also created good brand equity. Our efforts to increase our share in this market continue as these markets open slowly,” said Srinivas.

However, he said he did not see Europe becoming as big a market as the US, in terms of revenue and attributed this to a few structural issues in European countries. “Continental Europe—France and Germany—would prohibit any large-scale increase. Most of the firms have huge IT deployment that is managed by in-house teams. Any major radical shift would impact employees and hence, they focus only on discretionary spending. That too, when they make sure the employees would be absorbed in other jobs,” he said.

Srinivas also said he saw a new trend: Many of these firms, especially from the manufacturing vertical, are expanding into other geographies like the US, and emerging markets and tend to outsource their IT requirements in these markets. Since these firms are looking at growing into other regions, transformational deals are getting a leg up.

“Firms in Europe are coming out of the recession there is a fundamental shift in their outlook… While these firms are diversifying, they are also focusing on standardisation, processes simplification and rationalisation of costs. It is in these initiatives that we are seeing opportunities,” said Srinivas.

Because of its investment in Europe, Srinivas says Infosys is being called into such discussions more frequently. In the last 12 months, the company has been called by clients to fix problems entrusted to other vendors on three occasions. “In two of the cases, we managed to execute the programme well, and hence, we have secured the mandate to expand these programmes to other markets like Latin America and Asia,” he added. The contracts were worth $60 million (around Rs 270 crore) and $18 million (around Rs 80 crore). “The third project, in the range of $28-30 million, is still at the evaluation stage,” he said.