European IT firms reignite growth through offshoring
By Aravind Gowda / Chennai/ Bangalore July 20, 2006

Chennai / Bangalore, July 20, 2006 - Contrary to the popular belief that offshoring business processes to India means job losses in the US , several European IT companies are leveraging offshore capabilities to reignite growth, improve financial performance and capture new markets apart from enhancing the existing staff strength in their parent countries.

Belgium-based DeDuCo , Sweden ’s Telelogic, French firm Valtech and German company Case Consult are some of IT firms from Europe , which have tasted success by offshoring their business to India , according to a study by Peter Schumacher, president and CEO of Value Leadership Group, an international management consulting agency based out of Germany .

Not only did these four firms succeed by offshoring, they found themselves better off than before, said Schumacher.

“Moreover, by going offshore, they gained access to new opportunities and markets that they believe would not have been available otherwise. In the process they expanded by hiring more professionals in their parent countries. They proved that companies that offshore need not necessarily cut their staff strength,” he told Business Standard.

For instance, DeDuCo, a customer relationship management software development firm, faced a crisis in 1994 when 60 per cent of its development team left for better-paying jobs. Their efforts to recruit more engineers in Belgium was an expensive failure.

At a Nasscom summit in Brussels , they met a number of Indian outsourcing firms. Within a year, they decided to move into India on their own.

“In 2004, they changed their Indian operations name to xsysys technologies. They plan to increase their workforce tenfold to 300 and offer IT services as well as expand to reach the US market. None of this would have been possible if the company had stayed in Belgium ,” Schumacher pointed out.

Similarly, Valtech, a $100 million company that develops and implements advanced IT solutions for corporate clients in Europe and USA , commenced Valtech Offshore in Bangalore in 2003. They now have the highest ratio of offshore staff with over 50 per cent of the company employees working in Bangalore .

“The CEO is of the opinion that the day is not far when Valtech sets up its corporate office in Bangalore to become an Indian company,” Schumacher observed.

Telelogic is a provider tools for advanced system and software development. It has 40 offices in 28 countries and about 650 employees.

The Indian Global Support Centre (GSC), started in 2002, provides phone and e-mail based support for customers worldwide. Nearly 40 per cent of the capacity worldwide for the GSC is in India. The firm not only had more satisfied customers, but also additional revenue, in India, Europe and the US.

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