Software cos grow faster in Europe

Software cos grow faster in Europe

INDIAN software companies are seeing increased momentum in Europe. The continent turned attractive for Indian companies when the US slowed down between financial years 2000 and 2003.

Now, even as revenues from the US remain healthy, revenue contribution from Europe has jumped for several software companies.

For all companies in the table, contribution from the US (or North America as the case may be) to total revenue has fallen, while that from Europe has increased.

Over the last eight quarters, revenue contribution from Europe has jumped significantly for companies such as Infosys (17.7 per cent for the year ended March 2003 to 22.3 per for the March 2005 year), Satyam (12.4 to 16.6 per cent).

Interestingly, Mastek too saw a slump in revenue contribution from the US. It has been deriving a good chunk of revenues from Europe for some time now and has recently said that it wants to see more growth in the US. It has also relocated its CEO, Mr Sudhakar Ram to the US.

Like Mastek, iGate Global Solutions has seen absolute revenues jumping for Europe. Both companies have seen revenues slumping in the US and the rest of the world year-on-year.

Industry watchers say IT companies have been making investments in parts of the world other than the US, especially during the US slump and that those investments are bearing fruit now.

Infosys last year said it had made concerted efforts to increase revenues from non-US geographies over the last few years. "We have invested in sales and marketing in Switzerland, France, Germany and Australia," Mr S. Gopalakrishnan, Deputy MD and Chief Operating Officer, Infosys, had then said.

Interestingly, contributions for Infosys from India have come back to earlier levels. From 2.1 per cent of revenues in the March 2003 year, it slumped to 1.4 per cent in March 2004 and is now back up at 2 per cent.

Cognizant's European contribution to its revenues increased from 11 per cent in March 2003 to 13 per cent recently. It said for the quarter ending December 2004, it had noted increasing interest in offshore outsourcing from companies in the UK and in continental Europe, as was evident from a "steadily growing number of inquiries and visits from potential clients."

It added, "That trend has continued and during the quarter (ended March 2005), our operations in (these geographies) had several key wins for application development and re-engineering services. We believe that we are just beginning to see the start of real momentum growing in Europe."