Germany is the largest IT market in the pack, purchasing over $36 billion worth of IT services, followed by Switzerland ($7 billion) and Austria ($3 billion).

New Delhi: Indian IT industry's revenue from Germany, Austria and Switzerland could increase four fold to $10 billion by 2020, as potential clients mull nearshore and offshore options to overcome cost pressures and resource crunch, a report by Nasscom said.

Large Indian tech vendors such as TCS and Infosys currently offer application development, infrastructure services, engineering services, production support, and BPO services to clients in the region, although Indian industry's total revenue from this market has been less than $2.6 billion. TCS, for instance, serves 65 German and Austrian companies. Some of its large clients include Daimler, Deutsche Bank, Deutsche Börse, SAP, and Commerzbank. Conversely, German majors such as SAP have leveraged Indian skills by setting-up R&D and global services and support units in India. SAP Labs India employs over 4,000 professionals with centres in Bangalore and Gurgaon.

“The Germanic countries are facing acute talent shortages in the knowledge based sectors like IT and engineering services. India is a natural partner, with a large technically qualified talent base, global experience and lower cost. The 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 and BPO industry,” the Nasscom President, Mr Som Mittal, said. The IT services market in the Germanic countries is estimated to be $100 billion, of which $46 billion is purchased (that is outsourcing and offshoring). Close to $5.6 billion worth of services are offshored, almost $1.4 billion comes to India.

For the record, Germany is the largest IT market in the pack, purchasing over $36 billion worth of IT services, followed by Switzerland ($7 billion) and Austria ($3 billion). “The BPO market alone is estimated to be $4 billion and offshored engineering services around $3.4 billion,” said Nasscom. Manufacturing, BFSI, automobile, and logistics sectors are the most attractive targets for Indian companies – these four verticals together consume IT services worth over $30 billion. Apart from SME IT vendors, the large players in Germanic market include IBM, HP, Siemens, Accenture and T-Systems.

The Nasscom report said that going after a larger business in these markets would require tactical measures by Indian services companies. Indian players will need to increase their foothold in the region through local and nearshore presence (Eastern Europe and CIS countries) for added client comfort, besides building on German language skills. Indian firms should also look at large ticket acquisitions to gain access to customer accounts and to build scale. Another key strategy shift would be to tap the SME clients – constituting 75 per cent of the German market and 99 per cent of Swiss and Austrian markets.

“Indian vendors have so far engaged with large firms, and the SME demand is still untapped…Currently, the SME segment is being served by the local SME IT and BPO service providers. Indian companies will need to join hands with local SME tech vendors to address the market,” Mr Ameet Nivsarkar, Vice-President of Nasscom said.
Apart from RIM and application development, the low hanging fruits for Indian companies would be package product maintenance and implementation services. In the BPO segment, the quick wins could be in non-voice based transaction services, that is, financial services back office, Finance and Accounting, and HR services. Considering the language sensitivities, voice-based contact centre services should be taken up only after acquiring the relevant expertise.