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Get European companies a better deal?

August 10, 2009

Even though the American market retains its top position as the largest market for Indian and other foreign service providers does this not automatically mean that American companies get the best deals. Many foreign service providers were already worried for some time about the depreciating dollar, but the economic collapse really showed how vulnerable one is, if completely dependent from one market. This has resulted in those offshore vendors who have the cash, to double their efforts to get European clients in. Those vendors which do not have the seize to invest in European (non-UK) front offices are now looking frantically to open other sales channels like partnering with smaller European vendors.

For European organizations which are thinking of outsourcing may want to speed their decision making up as nice deals can be made (if they are willing to engage with an offshore supplier that is, many local companies are still not ready for that). In order to obtain their first continental European customers, foreign suppliers are very likely willing to buy their way in and offer very favorable conditions. The rational of the supplier is that the return will come later by capitalizing on the client’s reference and by expanding the scope of the initial contract.

European Outsource

The opportunity for continental European client companies is at the same time a risk for the local European suppliers who will continue to see the price pressure increase. The local European players have the challenge of convincing the client of their innovative solutions and knowledge of the local market, rather than to compete on price. In the meantime deploy typical European players like Atos Origin, CapGemini and LogicaCMG aggressive expansion plans in low wage countries to leverage their expensive European labor pool.

This does however not mean that Indian and other outsource suppliers can just wheel in their new contracts over here in Europe as the local culture and language prevent a quick penetration, apart from the large multinationals, which are used to work with international partners. There is thus a large pool of client companies which are now catered solely by local suppliers, but may also become a target group if the offshore vendor is able to package its services the right way. Think of partnering with a smaller local supplier or setting up (with multiple suppliers to share cost) a local front office.

I wish both foreign suppliers and European client companies a good hunting season.

Related posts:

  1. Before you wriggle out of an expensive outsourcing deal
  2. Does outsourcing really add value to companies?
  3. Do Europeans look differently at offshoring?
  4. Can President Obama alter offshore outsourcing for US companies?
  5. Indain outsource companies snatching or creating new jobs?


Written by François Zielemans · Filed Under Outsource Blogs 

Comments

3 Responses to “Get European companies a better deal?”

  1. Jon on August 10th, 2009 1:11 pm

    Not sure how many companies in Europe is ready for outsourcing? Does anyone know the % of companies outsource in Eurpoe vs US?

  2. Francois on August 10th, 2009 2:12 pm

    @Jon, I do not know the penetration of outsourcing of Europe versus America. I do however know that the growth figures have been higher in Europe, but that the total contract value is still higher in the US. More on the volume of outsourcing deals in Europe in Q12009 here: http://www.tpi.net/pdf/index/getfile.asp?file=1Q09_TPI_Index_Europe.pdf

  3. Eurpoe & Outsourcing on August 18th, 2009 5:52 am

    I know UK companies are doing lot of outsourcing to offshore vendors, any other country in Europe outsource just like UK? I read reports that says it is very difficult for offshore vendors to get into Europe due to trade barrier and protectionism.

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