European firms are interested in sending their work offshore but need more confidence to do so, according to the latest Forrester Report exclusively focused upon European firms’ offshore outlook and behavior. The report- Offshoring Strategies For Continental European Firms, specifically advises Indian offshore providers – eyeing continental European business that they must change their risk-averse attitude and invest in building sizable local capability to win deals from European firms.
The report authored by Forrester’s Sr. Analyst Sudin Apte, is based upon recent interactions with Pan-European firms as well as Indian and MNC offshore providers eyeing business from these firms. Says Apte, “We found that most pan-European firms are still not fully convinced of the offshore model’s suitability or benefits for their business, while offshore providers are yet to have enough capability on the continent. Several European firms sent large teams to India during the past six months as a way to test the offshore waters, but we found that these initiatives lacked a solid vision and strategy for the type of work to be sent offshore and at what pace.” Apte points: “These firms are rapidly becoming more interested in sending work offshore as some service providers are working furiously to improve their European capabilities.”
Forrester highlights that both Indian and European offshore providers have problems helping their European clients go offshore. Apte adds: “We found that Indian providers still struggle to build up meaningful local presence and practice risk-averse approach, which clearly states that they won’t make even smaller local staff acquisitions unless they see a direct and immediate increase in their European sales books. Also, clients we spoke to complain that the Indian firms they’ve worked with so far often fail to demonstrate commitment to the service levels promised.” In addition, European firms’ federated as well as relatively stringent and demanding procurement approach to offshore, unreasonable language fluency expectations from vendors, coupled with difficulties in getting the staff onshore to the client site for longer engagements due to government regulations regarding visas, are some of the key obstacles listed in the report that service providers are facing in Europe.
It further states that the interest in moving work offshore is prompted at the C-level at European firms. “Business pressures and competition are forcing leaders at European firms to look east in order to retain a competitive edge. And hence, most current evaluations of offshore initiatives at these firms are the result of board mandates or the influence of the CEO himself,” explains Apte. Terming the heated offshore selection debates as political battles in disguise, the report underscores that ‘though C-level executives are convinced about the value of offshore, the sentiments are not shared by all of the business organization or IT.’