Being largely conservative, the European markets have adopted different models for IT Outsourcing (ITO) and BPO. Most of them have set up these services within their organizations, while many others have opted for shared-services or captive centers. The  adoption of outsourcing on the continent has been gradual as services are moved first to captive or shared-services centers, and subsequently commodity services are outsourced. Such an approach has restricted the growth of outsourcing, and especially offshoring, from the continent.

The European market is diverse, and there are various regions that are at different stages of understanding, adoption and maturity of outsourcing of services. Based on present market opportunities and development, this market could be divided into four regions in terms of outsourcing attractiveness: The U.K., Benelux, the Nordics and the rest of Europe.

As the market evolves, these corporations have begun to evaluate outsourcing of new services that are aligned with the customer’s requirements. U.K.-based corporations prefer Ireland where English-speaking resources are easily available; the Nordics prefer the Baltics (Latvia, Lithuania and Estonia); and Eastern Europe is preferred for proximity, language skills and high-end services. Other than in the U.K., offshoring by European countries is restricted mostly to ITO,  and one of the most preffered destination for it is India.

The diversity of the market is a challenge to providers and their strategy should include a combination of onshore, nearshore and offshore elements providing a true global delivery model. Here are some unique features of the European market:

• Cultural diversity and uniqueness: Different regions and countries have different languages and cultural mores that make it essential for service providers to customize their solutions and business approaches to local needs.
• Maturity levels: These levels differ across various regions of Europe. The U.K. has been outsourcing for quite a while now and is considered to have matured. The Benelux region came into the outsourcing limelight thanks to the ABN AMRO mega deal last year. Though adoption has not been very rapid in the region, it is expected to attain maturity. Being host to some of the most high-cost countries, coupled with a diminishing resource base, is forcing Nordic companies to pay serious attention to outsourcing.
• Relationship-based and longer sales cycles: The European market is relationship based, making it essential to build strong relationships before business can be conducted, thus making the sales cycle fairly long.
• Employment regulations: Each region has its own employment regulations, which makes it critical for providers to customize their approach to each region.

Service Providers in Europe
Given this background, while the market is abound with opportunities, the number and types of providers catering to IT is changing significantly. At a high level, IT and BPO providers in Europe can be categorized into: Global, Continental, Indian and Regional- or Country-specific. (See Table 1)

Global providers such as Accenture, Capgemini and Fujitsu are well entrenched in the European market and have well-established relationships with customers. These providers are now integrating offshore locations such as East Europe, India and China into their global service delivery model.
Whereas, European continental providers are focused on the European market. They provide customer proximity, business understanding and cultural understanding but they have been slow in adopting offshore model.

Almost all the major Indian providers have operations in Europe specially in the U.K. But only a few tier-1 service providers have presence in the rest of the continent. 

Sridhar Vedala is the Director of Global Sourcing group at Morgan Chambers, and works with clients in Europe in the areas of business and outsourcing strategy.

Why Europe Outsources

Satisfaction Level  ADM BPO Infrastructure End-user computing (from highest to lowest)

Processes Outsourced Infrastructure (data centers, application servers and external networks) ADM End-user computing (desktop support, LAN, print and file servers) BPO  (From most processes outsourced to least)

Outsourcing plans for future 50% believe that they are certain or likely to outsource  25% believe that their current outsourcing plans would not change (Based on response from survey participants)

 

Key Providers in Europe
	Key Providers
Global	Accenture, Capgemini, CSC,   EDS, Fujitsu, HP, IBM, Unisys
Continental	Atos Origin, LogicaCMG, SBS, T-Systems
Indian	Cognizant, Genpact, Infosys, ITC Infotech, Satyam, TCS, Wipro, WNS, Zensar
British	Capita, Computacenter, Vertex, Xansa, BT
Belgian	Belgacom, Cegeka,  Dolmen, Econocom,  Telindus
Dutch	Centric, GPR, InterAccess, KPN, Ordina, Schuberg Phillis, Simac
	Source: Morgan Chambers