Nordic region offers $10bn opportunity for IT: Nasscom-PwC

The Nordic region (Norway, Denmark, Iceland, Finland and Sweden), which is now opening up to offshoring as a viable option to sustain its long-established competitiveness, offers an untapped $10 billion outsourced services opportunity for Indian IT companies, said a Nasscom-PricewaterhouseCoopers report.

“Nordic companies, though experienced in outsourcing, have been cautious with offshoring. Though India has been a destination of choice along with East European countries, the overall exposure to offshoring has been low. It is estimated that less than $1 billion worth of IT services are offshored to low-cost destinations from the Nordic countries,” the report titled ‘Opportunities for Indian IT industry – Nordic countries’ said.

This is the third report in a series by Nasscom focusing on specific country/regions, which are new markets, competitive destinations and potential partners for India, with the earlier two being on China and Japan. The IT services market in the Nordics is estimated to be $10-12 billion and is growing at 5 per cent CAGR (compound annual growth rate).

Releasing the report in Hyderabad on Wednesday, Ameet Nivsarkar, vice-president of Nasscom, said currently 90 per cent of the exports by Indian IT-BPO companies ($71 billion in aggregate revenues in FY09) were focused on the US and Europe with rest of the world contributing just 10 per cent. Indian companies currently have a limited presence in the Nordic market with total estimated revenue from this region at around $500 million.

The Nordic region with high ICT adoption, besides R&D investments, offers an untapped opportunity for Indian IT companies and another potential entry point to Europe. Many Nordic companies have set up shared services centres in Eastern Europe and India. The market for business services in Nordic is estimated to be around $2 billion with a growth rate of 9 per cent CAGR. The major considerations while selecting a destination of choice are opportunity for near-shoring and the European Union directives on data protection, Nivsarkar added.

Stating that manufacturing, telecom, public sector, BFSI, engineering services and remote infrastructure management were the sectors the Indian IT companies need to target in Nordic, PwC associate director Abhijeet Ranada said the Nordic IT services market comprised a large number of international and regional service providers.

“The market is in the consolidation phase and has seen a large number of takeovers and mergers in the recent past. Though Indian vendors have also been active in this scenario, the transaction size has been small. Indian vendors today should look at large ticket acquisitions as a viable strategy to establish themselves in this market,” Ranade said.