Indian firms struggle to crack European offshore market

Businesses are increasingly opting to use traditional IT services firms rather than those based overseas when offshoring IT functions.

New research from IDC claims offshore IT companies such as the leading Indian firms Infosys, TCS and Wipro will account for just 1.3 per cent of total Western European IT services spend this year.

"This is a surprisingly low ratio, considering the 'noise' created in the market by offshoring," said Marianne Kolding, director for IDC's European services group in a report. "Even the largest Indian offshore service provider is a distinct third-tier player in Europe."

In the report Impact Analysis of Offshore Services Providers on IT Services Spending in Western Europe 2003-2009 Kolding says firms will instead turn to the traditional IT companies.

"Low-cost countries will increasingly impact on the delivery of IT services in Western Europe, but IDC believes that clients are much more likely to use intermediaries, such as their regular providers of IT services, organisations like IBM, CSC, or Capgemini rather than offshore service providers," said Kolding in the report.