French IT cos focus on India

NEW DELHI: After years of wait-and-watch driven by internal resistance and client scepticism, French IT service providers are warming up to offshore strategy and creating delivery centres in locations such as India, although a bulk of them still remain cautious about acquiring offshore services firms.

A slew of French companies, including Altran, Atos Origin, Bull, Capgemini, GFI Informatique, Silicomp, Sopra Group, SQLI, Unilog (Logica CMG) and Valtech have opted to create their own offshore subsidiaries — many of them located in India. However, only a handful of these firms, including Bull, Capgemini, CS Communications, Sopra Group and Valtech have concluded acquisitions in offshore destinations.

A Forrester Research report points out that apart from Capgemini’s deal with Kanbay, most companies chasing inorganic strategy have ended up acquiring smaller firms — 200 employees being the maximum. In addition, French services firms do not see long distance partnerships a ‘viable option’, Forrester added.

These IT firms are using offshore locations for services such as application coding, integration, and maintenance and testing amongst other functions.

“As global competition in the IT services space intensifies, French vendors will feel a compelling need to set-up and scale-up operations in India to strengthen their offshore appeal over the next 2-3 years. We feel that many of these companies, like their global counterparts, may choose a hybrid route — a captive alongwith third party relationships,” said Nasscom president Kiran Karnik.

While Bull bought Polish firm AMG.net in 2006, Capgemini acquired Indigo in 2006 and Kanbay in 2007, the latter being a $1.25-billion deal. Other takeovers include Valtech acquiring Indian offshore company Majoris; CS Communications acquired firms in Romania and Croatia; and Sopra Group’s acquisition of Newell & Budge in the UK.