IT majors chase $6.5 bn Belgian outsourcing deals

BANGALORE: Belgian Grand Prix is not the only race where Indian hopes are riding high. A worsening economic crisis is forcing companies such as AXA, Dexia Bank, Belgacom, drugmaker UCB and car insurer Allianz in Belgium explore IT offshoring and back-office projects, making it almost $6.5-billion opportunity for Indian outsourcing vendors including TCS, Infosys and Wipro apart from MNC rivals.

According to Quantum Step, an outsourcing advisory firm, customers in Belgium will spend around $1.8 billion on infrastructure management outsourcing, almost $2.6 billion on application development and maintenance and nearly $2 billion on BPO this year.

“We have recently started discussions with some Indian suppliers for pure offshoring of our ERP maintenance — it would be fair to assume that until last year, we were not prepared for any such initiative,” said an official at one
of the biggest Belgian enterprises.

While many Indian offshoring firms have been attempting to hire more local European sales professionals and project consultants, it appears that now customers only want to deal with Indian offshore experts. “Many outsourcing dialogues these days are being spearheaded by Indian offshore delivery managers, unlike in the past when some local expert would help us gain entry into an account — the CIOs are specifically asking for Indian suppliers,” said a top executive at one of the Indian IT firms pursuing outsourcing contracts in continental Europe. Officials at the Belgian firms did not respond to an e-mail query sent by ET.

When contacted by ET on Tuesday, TCS said the company’s early investments in the Belgian market are now fetching dividends. “Belgium represents one of the more mature markets for us within Continental Europe. After 15 years of operations in the country, we hold a significant share of the market and are now a prime IT partner to some of the largest BEL20 companies,” said AS Lakshminarayanan, vice-president and head — Europe, TCS.

“Our strategy to invest in localised delivery centres in Europe, particularly the ones in Eindhoven and Luxembourg, fuses well with our Global Network Delivery Model,” he added. TCS already has around 700 professionals working for Belgian customers, with around 200 onsite. InBev, AXA and Belgacom are among TCS’ top customers in Belgium.

xperts such as Sridhar Vedala of outsourcing advisory firm Quantum Step say that the key European markets opening up for offshoring includeBeNeLux, Nordics, Germany and France. “Most of the European companies are more or less first time outsourcers. Some big multinationals had offshored previously such as ABN Amro, Ikea, Nokia and Philips.

However, this did not trickle down to regional customers as many of them felt that there was cultural mismatch. Also, to a large extent, Indian providers also did not focus on this market,” he told ET in an interview.

As reported by ET recently, BASF AG, the world’s biggest chemical company, along with Euroclear-Europe’s largest settlement firm, and Anheuser-Busch InBev — the world’s biggest brewer are among companies looking at offshore outsourcing for the first time, as they seek to lower their operational costs and cope more effectively with an unprecedented slump in demand for their products and services.