IT-BPO provider? – Try to be as Germanic as possible!

May 25, 2010

To be successful as an outsourcing service provider you should put yourself in your client’s shoes. If you provide your services to other geographical destinations, try to consider their specialities as language, culture, the way of doing business and other local factors. And if you want to do business with Austrian, German or Swiss customers, try to be as Germanic as possible.

According to a report by NelsonHall, only in Germany (which is the biggest market out of Germanic countries) the annual growth rates for the BPO market amount to around 7.2 percent. It is forecasted that the German BPO market in will reach an estimated volume of EUR 14.4 billion by 2013. The report also says that approximately one third of German companies plan to make a use of BPO within the next two-year-period, creating a number of opportunities for both: international and domestic companies.

Comparing to the US and UK companies, the demand of Austrian, German and Swiss companies for outsourcing and offshoring has been rather restraint, although the situation has changed in the past couple of years. More and more Germanic companies come to the conclusion that focus on key business offers them competitive edge. Except of that, outsourcing offers the possibility to improve the cost structure and to buy specialized services and know-how.

Increasing demand for business services in Germanic countries is partly driven by the economic structure, which is characterized by a strong base of small and medium-sized enterprises (SMEs). They are typically not big enough to establish their own shared service centers and therefore interested in outsourcing possibilities. Therefore we are now confronted with a growing number of Austrian, German and Swiss companies successfully working with external partners.

The trends have also been confirmed by the NASSCOM and PwC report, published in May 2010. This report focuses on opportunities for Indian companies offering IT-BPO services in the Germanic market. It points out that the region of Austria, Germany and Switzerland is the 4th largest economy with a total GDP amounting to USD 4.5 trillion. It is expected that Germanic countries will demand for qualified IT professionals such as software developers, IT consultants and project managers in the coming years, which cannot be covered by domestic resources.

The above mentioned NASSCOM and PwC report provides further a detailed analysis of the Germanic IT market. The tendency looks as follows: top 9 players control almost 60% of the market. These are the following companies:

T-Systems (15%),
IBM (12%),
HP incl. EDS (11%),
Siemens (7%),
Accenture (4%),
SAP, Atos Origin, CSC and Capgemini (2% market share each).

These companies have already had their significant offshore presence in India.

Potential Germanic customers can be a big challenge for Indian IT-BPO providers due to expected German language skills and lack of offshoring maturity of processes possessed by companies located in Austria, Germany and Switzerland which have been used to provide services in-house or outsource them to nearshore locations. But India can definitely be attractive for them due to the big pool of talented IT professionals, for cost and scalability reasons.

Debjit Chaudhuri, head the German division of Infosys Technologies, says that he needed to expand his office near Frankfurt (Germany) in order to take advantage of corporate Germany’s increasing appetite for outsourcing. The growing number of orders also means that Infosys is training people in India to become familiar with German culture. “They can’t all be in Germany but they need to know how it is here. The whole idea is to be as German as possible,” he said.

So, how about improving your German language skills (and local competencies) now? The market potential should be a good reason to do that, shouldn’t it?

Literature:

Marc Young, Outsourcing Made in Germany, Deutsche Welle, 22 July 2004
Opportunities for the Indian IT-BPO industry in the Germanic Market, NASSCOM and PwC, 20 May 2010
Outsourcing und Offshoring in Deutschland – die aktuelle Situation, 21 May 2010
10th Annual European Shared Services and Outsourcing Week 2010: Germany’s Back-Office Segment Shows Strong Growth, Germany Trade & Invest, 21 May 2010

Magdalena Szarafin
http://www.szarafin.info


Comments

4 Responses to “IT-BPO provider? – Try to be as Germanic as possible!”

  1. Robert on May 26th, 2010 3:48 am

    Hi,
    very good article! And thank you taking for our blog as a source.
    I’m anxious to see the German outsourcing market grow. In my experience Germany is lagging behind in terms of companies using outsourcing, but it’s also speeding up recently.
    FYI: the blog is also available in English (http://www.twago.com/blog).
    Best,
    Robert

  2. BPO on May 31st, 2010 3:58 am

    Nice post about IT and BPO provides across Germany, Australia, and India etc.

  3. BPO growht in Germany on June 8th, 2010 12:36 am

    Interesting article to know about German BPO market potential. Once the EU bounces back, I’m sure there will be more demand for ITO and BPO servies

  4. Mahesh Perera on November 12th, 2010 1:28 am

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    Please reply us at your earliest possible with your decision.

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