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As the Indian information technology (IT) services sector looks beyond traditional markets, mid-size player Mindtree has identified the DACH region, which includes Germany, Austria and Switzerland, as one of its sweet-spots.
The predominantly German-speaking region has remained under-penetrated by Indian IT vendors, mainly due to language barriers. IT spending in Germany is estimated at around $75 billion (over Rs four lakh crore) annually, while the rest of the DACH countries spend around $90 billion (over Rs five lakh crore) on IT each year.
As one of the first steps towards strengthening its presence in the region, Mindtree recently expanded its leadership team there by bringing on board Ralf Reich from larger peer Wipro. Reich would be responsible for growing the Bangalore-based company's presence in the region across targeted industries like banking, financial services, insurance, retail, manufacturing, travel and transportation.
"I don't see challenges (for myself in my new role)," said Reich in an email interview with Business Standard. "While larger global IT service providers like Capgemini, Accenture, Atos, and Infosys are present in the major European markets, real differentiators will come from modernisation in areas like digital, omni channel solutions in retail and infrastructure, and we are in talks with CIOs and CMOs in client companies to push up the scope of engagement,"
Reich, who is based out of Germany, said the potential clients in the DACH region are accepting Indian outsourcers much more now than earlier, and the major focus areas for companies in this region are business process outsourcing (BPO), application development and management (ADM), and infrastructure management services (IMS). "We see a lot of opportunity coming in from these areas," Reich said.
Traditionally, even as the US and Europe make for 40 per cent of the global IT spending each, the exposure of Indian IT services providers has remained lower in Europe, as it has been limited to the English-speaking countries. On an average, US accounts for around 60 per cent of the business of Indian IT services companies, with Europe contributing only 25 per cent.
Going forward, Mindtree will look to strengthen its local teams further by hiring more experts in the region, which would be beneficial as they would speak the local language and understand the local culture.
Additionally, Mindtree is also looking at initiating some student exchange programs or university alliances in the DACH region, to tap into the local engineering talent. The company would look to bring students on board as interns and offer them a perspective into other markets, especially emerging ones like China and India, Reich said.
While Indian IT services players have penetrated to some extend in sectors like automotive and manufacturing in the DACH region, Reich said, other sectors such as retail and infrastructure are also increasingly open to outsourcing now.
INITIATIVES TO GET FOOTHOLD IN DACH
* Hired Ralf Reich from competitor Wipro to head region
* Looking at pushing scope of engagement with clients
* To hire more local workforce
* To initiate university alliance programs
* To bring on board local interns
