Nasscom bullish on Europe despite financial crisis
NASSCOM, the apex software industry association of India, believes Europe, and specifically Germanic countries, consisting of Germany, Austria, Switzerland, are still attractive markets despite the current financial crisis.
“Current European uncertainties are short-term in nature and we are confident that the European bloc, as a whole, will continue to be one of the largest markets for the Indian IT-BPO industry,” Nasscom president Som Mittal told ET. As the Indian IT industry looks to expand beyond its traditional markets of the US and the UK, Nasscom has identified Germanic countries as the third-largest market for IT services following the US and Japan.
The software industry body, along with consulting firm Pricewaterhouse-Coopers (PwC), has pegged the addressable market size for IT in Germanic countries at more than $53 billion. As against this, Indian IT firms earn less $2.6 billion from these countries.
Nasscom estimates business from the Germanic countries, the largest IT services market in Europe, has the potential to grow to $10 billion by 2020, but only provided Indian companies take the ‘strategic and tactical steps’ required to succeed in this market. The BPO market opportunity is estimated to be $4 billion and the offshored engineering services market $3.4 billion.
“While the US and the UK comprise 80% of exports, the future focus is to enter newer territories,” Mr Mittal said. The Germanic countries are big IT spenders, with Germany and Austria each spending about 2.5% of their GDP on IT, and Switzerland spending over 5% of its GDP.
“Long-term commitment and effective partnerships will emerge as the biggest deciding factor that will sway client contracts towards Indian companies in the region,” said Sankar Ramamurthy, executive director, PwC. Germanic countries are also recognising that they need technical manpower and access to talent, said Mr Mittal.
“About 80% of employment in these countries is in the SME (small and medium enterprises) sector. They have to invest in IT to become more competitive. Today these SMEs are also being serviced by SMEs in IT sector and neighbourhood IT firms,” pointed out Mr Mittal. The $46-billion Germanic IT services market faces shortage of science and technology graduates and cost pressures.
Source: Economic Times Mumbai; Date:2010 May 20; Section:Business & IT; Page Number 17