Recent acquisitions by Indian IT services companies signal a shift from their earlier reluctance to buy continental European assets to viewing the region as a key growth market. Persistent Systems' acquisition of Germany-based Nagarro follows LTM Ltd's purchase of Randstad's technology and consulting business in May. HCL Technologies Ltd (HCLTech), Wipro, and Infosys have also acquired niche firms across continental Europe in recent years.
Mint explains what's driving this shift.
Is there growing interest among Indian IT companies in European assets?
Yes. Persistent Systems' purchase of Munich-based digital engineering firm Nagarro and LTM's acquisition of Randstad's technology and consulting business highlight the growing momentum. HCLTech, Wipro, and Infosys have made similar acquisitions across continental Europe.
Historically, consolidation in Europe was driven largely by regional players such as Capgemini, Siemens and Atos. Indian IT companies are now emerging as active acquirers, reflecting confidence in Europe as a long-term growth market. For Persistent, the Nagarro deal raises Europe's share of revenue to 22% from about 9%.
The deals also signal a strategic effort to diversify beyond North America. They provide immediate scale in Europe's mature but fragmented IT services market, where local presence, client relationships and regulatory expertise are often essential to winning business.
What's driving this trend?
Several factors are driving Indian IT's growing appetite for Europe.
Geopolitical uncertainty, tighter immigration policies and slower spending in the US—the industry's largest market—are pushing companies to diversify. At the same time, Europe's digital transformation agenda, backed by regulations on artificial intelligence (AI), cybersecurity and data governance, is creating fresh demand for technology services.
Many European enterprises still rely on legacy systems, creating a significant modernization opportunity. Acquisitions also provide quicker access to local talent, client relationships and regulatory expertise than building businesses organically. European technology firms tend to trade at lower valuations than comparable US peers, making them attractive acquisition targets.
As growth in traditional outsourcing slows, Europe has emerged as a natural destination for diversification through acquisitions.
Will this trend gather pace? Why?
The trend is likely to strengthen.
Europe's IT services market, estimated at about $490 billion, is expected to grow to around $675 billion by 2031. It remains fragmented across countries, languages and industry verticals, leaving room for consolidation.
Indian IT companies, meanwhile, are under pressure to cut dependence on the US, which still accounts for about 70% of industry revenue, according to Nasscom. Acquisitions provide access to local clients, skilled talent and delivery centres while helping companies meet the European Union's growing emphasis on local presence and digital sovereignty.
What is the biggest gain for Indian IT?
The biggest gain is market access and credibility.
Acquiring established European firms gives Indian IT companies local clients, delivery centres and expertise in navigating complex regulations, strengthening their ability to win enterprise and government contracts that require a local presence.
The deals also diversify revenue beyond the US while adding specialized capabilities in areas such as engineering services, SAP consulting and AI-led transformation. The acquisitions also help reposition Indian firms from offshore service providers to global technology partners.
What are the risks?
The strategy carries significant risks.
Integrating acquired businesses can be difficult because of cultural differences, stringent labour laws and complex regulatory requirements. Europe's strict data protection and compliance requirements raise the cost of doing business. Political sensitivities around foreign ownership may also create resistance in some sectors, while paying too much for assets in relatively slow-growing markets could hurt returns.
Currency volatility and Europe's fragmented markets add further uncertainty. Indian IT companies have traditionally relied on offshore delivery to protect margins, so expanding higher-cost local operations could squeeze profitability if integration falls short.