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Europe – Does it still remain a key market for Indian IT Services Companies?
Europe – Does it still remain a key market for Indian IT Services Companies?

March 2, 2023

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All of us are aware of what is happening in Ukraine and the challenges don’t seem to be ending sooner. Considering that the key point to ponder is that does Europe remains a key market for IT services companies?

To answer that question let's look at what ISG recently said on the topic which highlighted that “Demand for IT services in Europe remains resilient with enterprises now prioritizing cost optimization in the face of sustained high inflation and interest rates.”

Some key facts that support ISG’s viewpoint are:

In its 4Q22 Index call ISG highlighted that managed services in EMEA had a very strong year with an annual contract value (ACV) of nearly $15 billion which was up 6% y-o-y with over 1,000 managed services contracts worth $5 million+ in ACV being awarded. These numbers are recorded high with the growth being the highest growth rate since 2011 and the contracts being the highest number of awards ever for the region. What needs to be seen as the fine print is that within Europe this record-setting growth was not evenly distributed.


 

  • DACH, the Nordics, and Southern Europe – The ACV was up over 10% in 2022 with the region generating a combined ACV of over $10 billion last year.
  • UK and Ireland – On the other hand, were flat in 2022 after a very strong 2021 with ~$3.7 billion of ACV.

 

Outlook
 
ISG highlighted that they haven’t seen any decrease in demand in Europe through the first six weeks of 2023. However, given the continued pressure of high inflation and high-interest rates, clients continue to prioritize cost optimization in their outsourcing decisions.
 
Moreover, ISG is projecting solid demand for IT services in the region, in particular in Southern Europe and in the banking and public sector industries. Also, though the full-year forecast of 4.4% growth for EMEA is a tick below the 5% for 2023, the demand is expected to remain strong in Europe as enterprises look to reset their long-term cost structures in the face of sustained inflation and high-interest rates.

We just discussed what the global European outlook seems like with respect to IT services, to know more about how it really came out for the Indian Technology industry numbers read our Industry Quarterly Review.

Happy Reading!

 

 


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Neha Jain
Senior Analyst

Neha Jain

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