Europe revival helps IT survive quarter shocks
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Robust outsourcing demand from Europe helped cushion revenue growth in at least three of India's top six software services exporters during the June quarter. LTIMindtree , and Tech Mahindra gained new business from European clients, marking a revival for the region after three quarters of deal slowdown. Overall revenues in these companies rose in low single digits in the three months ended June."Europe has become an interesting case of late. It is starting to build tech capabilities to maintain its tech sovereignty, which at the moment is heavily US dependent...There is some regionality in the recovery of IT spend in Europe in the first half of calendar year 2025," said Ashutosh Sharma, vice president and research director at US-based research and advisory firm Forrester.He said UK, Ireland, and Benelux (Belgium, the Netherlands, and Luxembourg-three neighbouring countries in Western Europe) are doing fairly well even as other major economies such as France and Germany have stayed mostly flat or slowed down.Deal momentum has picked up pace, especially in cloud, generative AI , digital and cybersecurity, experts said. In June, ET reported that deal activity in Europe increased about 5% sequentially after three quarters of sluggishness. Europe comprises around 20-30% of the global market for India's top-tier IT firms while the US is at 40-50%.The recovery in deal activity comes at a time when the US, the world's largest technology outsourcing market, navigates trade and tariff-led policy uncertainties. In Europe, after 17 deals signed during October to December 2024, the momentum accelerated to 30 in the March quarter, showed a BNP Paribas report based on publicly available key large deals. A total of 14 deals were signed in Europe this April and May. Based on Q1FY26 earnings, HCLTech, India's third-largest IT company, recorded a 9.6% growth in constant currency terms in Europe, the second-fastest pace among regions globally.For industry leader Tata Consultancy Services (TCS), while Europe contracted due to a slowdown in banking and financial services (BFS) sector, insurance demand improved. TCS also announced at least two large deals in the region-one each a large pharmaceutical and agrochemical company, and a transport company.
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