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Europe regained market in Indian IT industry

How Europe trumped US for Indian IT companies


NEW DELHI: For the longest time, US was the largest as well as the most dominant market for the $150-billion software services industry. While it still contributes to two-thirds of the sector’s revenues, over the past few quarters, it is countries in Europe – especially in Continental Europe – that are bringing the maximum growth, defying the concerns around Brexit. Under a lot of pressure, US – especially in the banking and financial services (BFSI) industry –growth rates have reduced to low, single digits for top IT companies. 

Meanwhile, Europe – traditionally considered shy of outsourcing (except for UK) – is growing at a much faster pace. The percentage share of revenues contributed by the US has also been steadily coming down. 

While announcing the September quarter results, the CEO of Tata Consultancy Services (TCS) Rajesh Gopinathan said from a geography perspective, growth was “once again” led by a strong 5.3% quarter-on-quarter growth in Continental Europe and 5.7% growth in Latin America. “North America continues to grow below-company average, primarily due to the softness in BFSI and retail,” said Gopinathan. 

Similarly, in the case of Wipro , while US grew at a rate of 0.5% sequentially and 2.8% year-on-year during the September quarter, revenues from Europe were up 5.8% sequentially and 9.8% year-on-year. During the analyst call, Wipro’s CEO Abidali Z Neemuchwala admitted that the Americas have been under stress. He added it is mainly because of the stress in the healthcare sector. “The moment healthcare bottoms out, I feel quite comfortable with our traction in the US market. We see good traction in Asia-Pacific and emerging markets. Europe, we are finding good traction…” he added. 

The stress is visible in the case of revenue contribution of the US to the company’s revenues too. For instance, US contributed to 56% of TCS’ revenues at the end of September 2016, which has fallen to 54.1% at the end of September 2017. 

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