Indian IT Companies See Strong Growth in European Region
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Top Indian IT services firms are witnessing strong growth momentum in the European market as businesses are accelerating their digital transformation initiatives, seeking cost-effective solutions, and facing a shortage of skilled tech talent – all fortes of Indian IT companies.
For the first quarter ended June, Infosys' Europe business 12.3 per cent on a year-on-year basis in constant currency, which is over 3 times the company average. Europe, the second largest geography for the company, contributed 31.5 per cent to the total revenue. In comparison, North America, the largest geography, grew merely 0.4 per cent and contributed 56.5 per cent to the total revenue as of Q1.
"I think the growth in Europe in last multiple quarters and years is on back of a few things. We are one of the first companies a few years back to call out Europe as an opportunity. We have made, on back of that hypothesis, investments in Europe. And that has helped us win some of the very, very large and mega deals in Europe. So that has definitely helped from the growth in Europe perspective. There are consolidation deals that we have won as well in Europe. So that has helped. And over a period of time, Europe is also opening up from outsourcing perspective," Jayesh Sanghrajka, CFO, Infosys said in an analyst call.
Going forward, he said there are enough opportunities in Europe. "Now whether it will continue growing beyond the company growth or not, I do not think we are giving a guide on that. But where we are standing today, we are seeing opportunity in Europe. And many of the large deals are sitting in Europe as well as the pipeline contain a good amount of large deals in Europe."
Noida-based HCLTech's Europe business grew 9.6 per cent in constant currency and contributed 28.3 per cent to the total revenue as of the June quarter. In comparison, the US grew only 0.5 per cent.
A leading Europe-based telecommunication company selected HCLTech to modernize its technology and operations stack. The partnership will enable zero-touch operations through hyper-automation powered by GenAI. Also, a Europe-based automotive major selected HCLTech to deploy workplace management and agentic AI solutions to enhance operational efficiency and service quality, improve customer experience, and support new technologies.
Wipro's European business declined 11.6 per cent in constant currency in Q1 but the management believes the overall market remains positive.
"The pipeline continues to be strong in Europe. And in the BFSI sector, specifically in Europe, we have a good pipeline. And having said that, the large Phoenix deal that we won in Q4, we are going through the final planning phases. And actually, the revenue will start coming in Q3. That can give a good momentum for us in Europe. Second, we also are staying focused on some of these deals, which are cost takeouts and vendor consolidation," Srini Pallia, CEO and MD, Wipro said in a post-earnings call.
Analysts believe overall, major Indian IT firms are witnessing increased deal momentum in the European market. "This surge can be attributed to several factors: European businesses are accelerating their digital transformation efforts, seeking cost-effective solutions, and facing a shortage of skilled IT talent—all areas where Indian IT companies excel. Furthermore, these firms have successfully navigated strict European regulations like GDPR and have strengthened their local presence through acquisitions and partnerships. The ongoing uncertainties in the US market have also encouraged Indian IT companies to focus more on expanding their footprint in Europe. Additionally, all these companies are strengthening their regional presence by setting up more delivery centres, which enhances both their onshore and nearshore capabilities," said Biswajit Maity, Senior Principal Analyst at Gartner.
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