French Presence in India
On the other hand, after years of resistance and skepticism, French IT service providers have warmed up to the idea of India as a viable offshore destination. However, though a slew of French companies, including Altran, Atos Origin, Bull, Capgemini, GFI Informatique, Silicomp, Sopra Group, SQLI, Unilog (Logica CMG) and Valtech have set up ODCs in India, they are still hesitant to grow here inorganically by acquiring large development centers in India.

It was Capgemini, who bucked the trend following its $1.25 bn acquisition of Kanbay last year. Though Kanbay was an American company founded by a person of Indian origin, majority of its work was delivered from its development centers in Pune, Hyderabad and Chennai. The Kanbay integration significantly reinforced the financial services pole of Capgemini with a larger business in the US and UK, and a dedicated financial services platform in India with 6,000 people.

More importantly this was a great boost to Indo-French collaboration in IT. As a result of the acquisition, India becomes the second largest country in the Capgemini Group (with 18% of total headcount) and Capgemini is now present in six main cities in India: Mumbai, Kolkata, Pune, Hyderabad, Chennai and Bangalore. The combined company, which ranks among the top five IT consultancies worldwide, offers services spanning North America, Europe and Asia Pacific. With 7,600 associates in the US, UK, India and Apac, Kanbay increases Capgemini's global network of professionals serving financial services to more than 15,000, and raises its staff in India to approximately 12,000.

Valtech also acquired Indian offshoring company Majoris. Historically, Bull Computers too have had a chequered history in India. The saga started way back in 1988 when Bull took a 26% shareholding in PSI Data Systems in Bangalore. The agreements included an assembling in India of DPS-7000, an engineering help on GCOS-7 and DPS-7 in Paris and Bangalore. Bull shares in PSI subsequently increased to 40% and then 51% in 1989. The relation existed for more than a decade till in 2001, as part of a global restructuring, Bull exited from PSI offloading its stake to the Aditya Birla Group.

Many of these French companies, like their global counterparts, may choose a hybrid route-a captive along with third party relationships

Atos Origin, formed in 1997 from the merger of Axime and Sligos, services a host of clientele like Reuters, BMW Group, Cisco, Ericsson, Fiat, Nestle as well as the Olympic Committees of Beijing 2008, Vancouver 2010 and London 2012 with its multi-year outsourcing and AMC contracts. In recent years, the company has started to build solid foundations for its business in Asia, most notably in China and India, where regional revenues grew by more than 12% in 2005. With centers in Mumbai and Kolkata, ATOS has developed India as a viable offshore destination both for North American and European clients, besides a handful of large domestic enterprises.

If not directly IT, French companies do have a strong presence in the related fields of telecom and multimedia. Telecom major Alcatel has strong presence in Gurgaon, Bangalore and Chennai, while the global acquisition of Lucent has beefed up its presence in Mumbai too.

The issue of Indo-French collaboration received further fillip through the recent visit to India of a 200-member French delegation led by the French Foreign Trade Minister, Christine Lagarde. The assertion of the minister that her country was not opposed to takeover of their domestic companies by Indian business entities as in the case of Mittal Steel's buyout of Arcelor as well as the bid by United Breweries for the wine maker, Tattinger, would be welcome news for the likes of the Big 5 of Indian IT. This could finally open the avenue for stronger Indian presence in France.

For the converse to take place, Nasscom president Kiran Karnik feels that as global competition in the IT services space intensifies, French vendors will feel a compelling need to set-up and scale-up operations in India to strengthen their offshore appeal over the next two to three years. Result: many of these French companies, like their global counterparts, may choose a hybrid route - a captive along with third party relationships.

"Indien et Français IL des compagnies maintenant collaborent et ont établi un rapport fort".

Indian and French IT companies now collaborate and have established a strong relationship.

Au revoir. And don't forget to watch this space.

Rajneesh De
rajneeshd@cybermedia.co.in

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