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Indian firms step up IT play,acquisitions in Germany

Indian companies are looking at a greater play in Germany,the EU’s largest economy and the growth driver for the 27-nation bloc

Written by Anil Sasi | Berlin | Published: April 20, 2013 1:54:48 am

Indian companies are looking at a greater play in Germany,the EU’s largest economy and the growth driver for the 27-nation bloc.

While Germany is gaining traction with India Inc when it comes to overseas acquisitions,with an Indian firm figuring in every fourth acquisition in that country during the last fiscal,domestic IT firms too are increasingly in the race for contracts in Germany as big European corporations shed inhibitions about offshoring.

Infosys,India’s second largest IT firm,plans to open a new delivery centre in Munich in the wake of a five-year deal that it bagged in March 2013 from the BMW Group for offering infrastructure management services. Earlier,in January,Mumbai-based IT services company Geometric acquired German company 3cap Technologies GmbH for about $15 million.

A month before that,Cognizant Technology Solutions acquired six companies from Germany’s C1 Group for an undisclosed sum,through which the Nasdaq-listed IT major plans to strengthen its local footprint in Germany and Switzerland and ramp up its consulting and enterprise services.

“The (German) industry has managed to stay competitive even after the 2008 global financial meltdown,but there are concerns on retaining competitiveness as debt crisis in the EU lingers on. So,with this in context,firms are showing greater openness to outsource non-core operations such as IT and backoffice management,” Thomas Hune,senior manager,economic and industrial policy at BDI,the federation of German industries,said. Labour unions in Germany too are on board with the concept of outsourcing,according to Klaus Harbers from the umbrella union body DGB.

The $12 billion Tata Consultancy Services too has stepped up its focus on Germany over the last two years,having gradually shifted its market position from being an offshore-based vendor to becoming a full-service provider with local capabilities in Germany. With a delivery centre in Dusseldorf staffed by 100-odd consultants,TCS currently has 16 of the top 30 DAX companies as its clients in Germany.

Infosys currently gets around 24 per cent of the revenues from Europe,where it is looking for more growth. “Our new delivery centre in Munich will help us achieve this objective for BMW and allow us to expand our local presence in a key growth market,” according to Ashok Vemuri,global head of manufacturing and engineering services at Infosys. On its deal in Germany,Manu Parpia,MD and chief executive officer at Geometric said: “This gives us not only technology,but existing client relationships in Germany,which is critical.”

For the Indian IT-BPO sector,on the whole,Europe currently contributes a little under 30 per cent of the $76 billion in exports the industry is expected to clock in 2012-13. For companies such as Infosys,Wipro,Tata Consultancy Services and HCL Technologies,for whom success in continental Europe was so far limited to the UK and Nordic countries,Germany provides an opportunity to diversify business risks.

In terms of acquisitions,sectors such as software,automotive and renewable energy are clear favourites with Indian firms. Among the deals in the works is one involving the $1.3-billion component firm Amtek Auto,which is reported to be in the race to acquire NeumayerTekfor Group of Germany. This comes on the heels of Delhi-based Motherson Sumi Systems Ltd acquiring Peguform,a German auto component company with a turnover of $1.37 billion,late last year.

(The trip to Berlin was sponsored by the German government)

Widening the Net

Infosys plans to open a new delivery centre in Munich in the wake of a five-year deal that it bagged in March 2013 from the BMW Group

Geometric,in January,acquired German company 3cap Technologies GmbH for about $15 million

Cognizant Technology Solutions had also acquired six companies from Germany’s C1 Group for an undisclosed sum

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