Logica says offshoring has gone up by 15% in Europe

UK-based Logica set up its offshoring centre in India a few years back to offer services though its blended delivery model to its customers in Europe. Abhay Gupte, chief executive officer of Logica, told DNA that the concept has taken off in a big way, with European clients gradually increasing the percentage of the offhsoring component. Excerpts from the interview:

European companies are known to have inhibitions about outsourcing work to India. Do you see this attitude changing after the global financial crisis and the recent debt crisis in the European region?
What is crucial is the business model (of offshoring companies) and understanding the preference of clients (European companies). We already have very strong foothold in Europe and are very Europe-centric. For us, Europe is much beyond UK whereas other people (Indian IT vendors) have different connotations about Europe. If you have to be in Europe, you must know the market well and should support technologies that clients need in those markets. It is also very important to have the language competency as well as be compliant with local regulations and laws around privacy and security.

Do you think they are more inclined towards working with European firms than IT vendors from other geographies?
Absolutely. They definitely see value in them (European firms) especially when it comes language and understanding of local (European) way of doing business. When you talk of data protection and security, European market is very different from other markets.

When it comes to delivering services from other locations (to European customers), there are some restrictions. You need to be sensitive to that while providing support under those circumstances and terms. That is why we have what we call blended delivery model, which encompasses onshore, near-shore and offshore engagements from different locations.

Do you think margins are compromised in blended delivery model compared with pure offshore delivery model?
I wouldn’t call it a compromise. It is what you sell. It is what you bring in your solutions and engagements.

Does it give you a better pricing power compared to offshore vendors?
I wouldn’t compare our pricing model (with pure offshore model).  Pricing would depend on what percentage of work is deployed to offshore, near-shore and onsite locations. It would also differ based on a client’s past experience, complexity of application technology and some of the constraints that they may have from their own industry perspective. So it is not one (pricing) model that fits all.

What kind of opportunities are you pursuing in the local market?
We are addressing the local market very selectively in those areas where we have the global expertise.

How has the debt crisis in Europe impacted your business?
I would term it (debt crisis) as economic environment change that occurred and several factors went into it including the Greece situation. It has a definitely affected us. Economic crisis such as these occur and it does impact (businesses).  It has affected the spending of clients and governments. We are in it together like our clients. We would want to help our clients to deal with this in a much better way.

Are European firms offshoring more to cut cost after the debt crisis?
Yes, in our blended delivery (by European companies) model, the percentage of offshoring has gone up. I would say it is up by 10-15%.