Concerns surrounding businesses in Spain and Italy are prompting Indian IT companies to rethink their strategies.
With economic woes extending to Italy and Spain (in addition to Greece, Portugal and Ireland), delayed decision making by outsourcers and work permit issues are causing roadblocks to companies.
“We will continue to stay away from Italy and Spain,” said Mr Derek Kemp, EVP and Head of Europe, Middle East and Asia, iGATE.
A spokesperson from Wipro said that the company won’t comment on the future but said that it does not have significant exposure to Italy and Spain. “We will look at deals selectively in Europe,” Dr Ganesh Natarajan, Vice-Chairman and CEO, Zensar Technologies.
Capgemini
European companies like Capgemini which have a significant Indian presence are feeling the pinch too. “The market is soft and it is difficult to predict what will happen in the medium and long-term,” said Mr Aiman Ezzat, CEO of Capgemini’s Financial Services Global Business Unit.
Indian companies such as Infosys, TCS, NIIT, iGATE and others do business in these troubled countries. In 2008, Infosys had entered into a deal with Spanish bank BBVA to implement Finacle.
Similarly, TCS does work with Ferrari and other clients in Italy. “We are seeing some delays in decision making, but not seeing issues with payments,” said Mr Kemp of iGATE.
“If the crisis deteriorates, there will be acquisition opportunities and Indian companies should relook at their strategy when it comes to these two countries,” said Mr Sanjoy Sen, senior director at Deloitte.
While the majority of Indian tech companies do not have significant exposure — both in terms of clients and deals in these geographies, the IT market in those two countries is significant, going by analyst numbers. Both government and businesses in the two countries are expected to spend approximately $72 billion in 2012, according to Forrester Research.
Good opportunity
“This, in effect, is a good opportunity, according to some companies and analysts. “Indian companies should primarily look at Spain as a platform for nearshore delivery,” says Mr Peter Schumacher, CEO of Value Leadership Group.