Have small IT firms outwit the big IT giants?

It is not a secret that are at the lower rung of the competition hierarchy in the European technology market. Indian firms still have a long way to go before they get lucrative contracts from that market. But, they seem to be gradually creeping into European market, with smaller firms taking a clear competitive edge than IT biggies like Infosys and TCS, reports CXO today.

"I find that the big Indian companies are too pragmatic. Not able to take my requests simply...CMM Level 5 etc is of no use to me... all I want is my requirement to be fulfilled," Paul Schewefer, Senior Vice President and Chief Information Officer, Continental AG.

It seems that a market like Europe demands a highly aggressive planning and quick implementation of strategies if one wants to make the cut. For small companies with lesser number of people, it is comparatively easier to implement changes without having to go through various processes, making it fast. And many small companies in this market have built capabilities in niche areas unlike some giants.

Moreover, Hannover, Germany, based Continental Group's technology expenditure for this year could be up to $500 million. And a lot of that could go to the smaller companies. "Partnering with smaller Indian firms helps them to invest in manpower and technologies, and that helps us as well," said Schewefer.

For the smaller firms, they are looking at the European market via the partnership model. For instance, Aakit Technologies has just sold 26 percent to Germany-based Aequitas Group. "The deal deepens our access to Europe, and also gives our German partner India capabilities," said Tayeb Barodawla, MD, Aakit Technologies.

Earlier, there were reports that Indian IT firms needed long-term deals if they are to make any gain in Europe. It is true that many Indian IT majors are still finding a major share of their revenue from European market through project services, while most of the MNCs drawing revenue from long-term outsourcing contracts.

IT analysts are still of the opinion that top Indian IT companies like TCS, Infosys and Wipro will have to shift focus on long-term outsourcing in order to make significant gains in the European market. These three companies derive around 25 percent of their revenue from European market.

Agencies