Indian and French companies share no relation. The statement might sound extreme, but in the IT sector, it is not too far from the truth, at least till recently.

Historically, one can understand the reason for Indian IT services companies not venturing into France till now. The entire "superpower" structure of the Indian IT services globally, has been built on the foundation of the superior knowledge of English by Indians. Naturally, therefore Indian companies have targeted the US and Canadian markets to a lesser extent in North America to achieve their offshoring dreams.

Venturing into France
Subsequently, rather than mainland Europe, the target has been the UK and the British Isles and Australia. Just because of this reason, Indian companies have never been able to exploit the full potential of the Japanese outsourcing market-even France has been neglected so long for the same reason. The French companies have not made serious inroads into India. France is the 7th largest investor in India with the total FDI amounting to Rs 2,822 crore (August 1991 to November 2004). However, in comparison to other European countries, its share is less. The Netherlands, UK and Germany have brought in more FDI inflows in India during the same period.

In these days, when the Global Delivery Model (GDM) is touted frequently, the apparent apathy towards the French market is mystifying. Especially, when the likes of TCS and Infosys have seriously started looking beyond the English-speaking world, particularly the Spanish populace. One reason could be the fact that Spanish is prevalent across most of South America-the growing economic clouts of most of the countries here necessitated the movement of Indian IT services players to these markets.

On the other hand, beyond France, the French-speaking populace is mostly restricted to Western Africa. This region has some of the poorest countries of the world like Ivory Coast, Congo, Cameroon, Chad and Equatorial Guinea and obviously, is not a lucrative outsourcing market. In addition, the racial tensions in France itself (the riots of a year back are still fresh in memory) might too have contributed to Indian companies hesitating to have centers on the French soil.

In recent years, one major boost to the entry of Indian companies to France came from a relatively smaller tier-2 player from Pune, KPIT Cummins. Toward the end of 2005, KPIT acquired France's offshore consulting services provider Pivolis for 1.75 mn, thereby opening up a completely new geography through France for itself and to some extent, also for the Indian IT sector. Pivolis, a leading offshore consulting services providing company, based in Paris, already had a revenue run rate of 3.5mn. Its business model comprised onsite, near-shore and offshore contracts through partners, and it used Agile Offshore Software Development Methodology to encourage offshoring by French companies.

Even before the Pivolis acquisition, KPIT had a strong relation with a major bank in France in association with the company. The acquisition not just boosted this relation, but helped make inroads into both BFSI and manufacturing. Also, helping KPIT's French venture is its planned ODC in Broselow in Poland. "The Poland center will serve as near shore center for our European clients especially for those in Germany, but also for the French clients mostly acquired through Pivolis. In the next three years, it will house around 500 people," informs Kishor Patil, CEO and managing director, KPIT Cummins Infosystems.

Though biggies like TCS, Infosys and Wipro do have representative presence now in France and have also started servicing French clients, they perhaps need to go the KPIT path of a local acquisition to establish a strong foothold there. Having developed the UK and US markets first, Indian IT service providers have started increasingly challenging local outsourcing providers in mainland Europe, particularly in France and Germany. But Indian providers will find it more difficult to take on the multinational IT services giants, such as Cap Gemini, IBM, Accenture and Atos Origin. These companies have been restructuring toward a global delivery model, in part by reducing workforce in Europe and gradually increasing workforce in India.

To be successful, Indian companies should form partnerships or acquire local providers, and make sure they have front-end staff based in Europe, believes Gartner analyst Caudio Da Rold. He informs that clients in continental Europe, including France, have started to use Indian offshore service providers without announcing the deals. The reason for this reticence is that European business leaders still worry about the effect of offshoring on their company's workforce and external image. Nonetheless, TCS has a partnership with a French company in France, Wipro has its own representative office in Paris, Sankhya Infotech has a commercial office in Toulouse, while smaller players like Sify, NetKraft or Technova Information Systems have some sort of foothold in the French market.

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