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Europe shines brighter for Indian software exports

India's software service firms, content for long with the United States as their premier export market, are now looking to the other side of the Atlantic.

It helps them that a current slowdown in the US economy coincides with an increasingly open-door regime in Europe.

Industry leaders at the annual conference of India's software industry said that Europe was an increasing prospect for exports.

They expected Europe's share of Indian exports to grow and at the same time offer a more stable economic environment than the US because of its slower business cycles.

"My sense is that a lot of companies are looking at aggressively expanding in Europe," Anirudh Patni, a senior official of privately-held Patni Computer Systems, one of India's leading software exporters, said.

Patni said Europe has a leadership position in the wireless field, led by companies like Nokia and Ericsson in Scandinavia, and it was also a maturing market.

Europe accounted for 23.5 per cent of India's software exports in 1999/2000 (April-March). US-led North America accounted for 62 per cent.

The delegates at the conference said they expected Europe's share of the multi-billion-dollar Indian export pie to grow in the current fiscal year. The National Association of Software and Service Companies (NASSCOM) said in its strategic review for the year that it had started training Indian information technology professionals in French, German and Italian.

It singled out Germany and Britain for a "dramatic increase" in work permit visas last year.

Indian firms and technology workers had long been comfortable in the US because of its English language and what many industry leaders say is the US's warm and open business culture which contrasted with the somewhat conservative Europe.

But things are changing.

"We do see a lot of opportunities coming out of Europe," Patni said. His company has two offices in Germany and is looking now towards the Benelux countries and Scandinavia.

He said business cycles were "a lot slower in Europe" which made it more stable.

Strategic alliances possible

Fast growing Indian companies could look at possible acquisitions and partnerships to deepen operations in the continent.

"There are various ways to enter Europe. One is through strategic alliances," Roger Sharp, global head of technology at ABN Amro Bank, said.

"Generally, the larger you are, the more you want to diversify your portfolio and risk," he said.

Ashank Desai, chairman and managing director of Mastek Ltd, a top-level software exporter, said an early move into Europe, which accounts for 40 per cent of his company's business against the industry norm of 20 to 25 per cent, had helped now that the US is slowing down.

Mastek issued a profit warning for the last quarter after it hit a rough patch with an US-based Internet customer.

"We grew last quarter mainly because of Europe," Desai said.

Patni said Europe was slow to grow as a market because the continent was slow to outsource its business to contractors, like those in India. Indian firms had also felt more difficulties breaking into Europe than the United States.

"Language and culture are bigger reasons," Patni said.

Desai said Europe's market went deeper than the more visible communications sector. Software work related to business applications, maintenance and customer relations were also in demand, he said.

"In the end US and Europe are equal markets," he said.

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