We all know that the best cars, machinery and engineering products come from Germany. What many of us may probably not know is that the Federal Republic of Germany is also a big player in the IT field, and the country is the third-largest spender on IT in the world, after US and Japan. What this also means is a huge opportunity for Indian IT companies, which have so far focused primarily on North America and other English-speaking markets.

So what stops Indian IT companies from penetrating and doing business in the German market? Very little, was the general consensus among an august gathering of over 100 of India’s top IT managers at the end of a seminar, ‘Europe via Munich—The new Infobahn’. The seminar was held in New Delhi on May 28, 2003 and was organized by Dataquest in association with gotoBavaria, an inward investments promotion agency of the free State of Bavaria, and the Indo-German Chamber of Commerce.

Stressing the importance that Germany gives to its relations with India, H J Kiderlen, minister and deputy ambassador of the Federal Republic of Germany in India said, "Germany and India have shared long and fruitful bilateral trade relations and Germany would like to extend the cordial trade relations to encompass information technology as well." IT is shaping the new image of India in Germany, and also creating a new profile in our relationships. The share of IT products and services in Indian exports to Germany is growing, and the increasing investments by Indian companies are welcome and important to us.

In his address at the seminar, Peter Englert, Head of International Operations of gotoBavaria, said, "If Indian companies can tailor their business model to suit German markets, there is a huge opportunity waiting to be tapped." Introducing the audience to Bavaria, the largest state in Germany, he said that the market potential for software and IT services in Bavaria is around 100 million Euros, "which should be very interesting for Indian IT companies". He also invited Indian corporates to participate in many of the international IT trade fairs and forums held in Munich and Nuremberg every year.

Lack of awareness about a country’s law structure is a major roadblock for potential investors. The audience at the seminar was acquainted with many key aspects of German laws and policies—related to topics including labor, taxes and copyrights—by Dr Dirk Tuttlies, senior consultant at BBG, a leading law firm in Germany. BBG has a strategic association with KPMG for providing complete business solutions including accounting and auditing.

Tuttlies allayed fears about stringent laws regarding Intellectual Property Rights. Making a distinction between similar acts in countries like India, the US, and Germany, he said, "Although the patent rights are registered with the author, it is the corporation that holds the right to duplication, licensing and commercial exploitation of the patent. Moreover, the company can make improvements to the patented product or service and can take the new copyright in its own name."

He also cited the successful Indo-German partnership in the recent acquisition of Arexera Technologies, GmbH by Mumbai-based Aftek Infosys Ltd. "There are quite a few medium-sized IT companies in Germany that Indian companies can acquire and emulate the Aftek success story," said Tuttlies.

So what exactly was the Aftek success story in Germany? There was no better person to talk about it than Ranjit Dhuru, Chairman of Aftek Infosys Ltd. Speaking about the experiences of an Indian entrepreneur in Germany, he said that the oft-talked language barrier "is not big as it’s made out to be."

Talking of a good business model he said, "If you use the acquisition route, where you will have a German face to your marketing, installation and maintenance, you can have a winning proposition on hand." Dhuru also stressed on the importance of having a German partner, which he said, "goes a long way in shielding Indian companies from a myriad of German laws and cultural problems, and also is a far better interface for customers to deal with."

Later, Prasanto K Roy, group editor of Dataquest moderated a panel discussion comprising of leaders of some of India’s top IT companies deliberated on the German opportunity for business. Adding to the discussion, Raman Roy, chairman and CEO of Wipro Spectramind said, "within the BPO industry, if we leave the voice business apart, there is a mammoth opportunity for doing back-office related business in Germany exists and is huge, and all that is needed is initiative and focus."

Saurabh Srivastava, executive chairman of Xansa also pointed out the growing interest in Germany and the eagerness of German companies to do business with India. "While most Indian companies target banking and finance sector in Germany, the real opportunity for them is in sectors like manufacturing", added Srivastava. He also warned companies looking to garner BPO business in Germany to be cautious, as the labor laws are far stricter there as compared to the US.

Manoranjan Mohapatra, COO of Hughes Software echoed the same argument, as he pointed out that outsourcing of work—as we know in it in the traditional sense—is nearly impossible for German companies because of strict legal issues. He said, "we feel that the real opportunity lies in new product development, or developing a technologically niche product."

Speaking on the nuances of setting up operations in Germany, Dhuru of Aftek remarked, "companies should be prepared to spend a fair amount of time and money before their deal with a foreign client works out." He also said that dealing with large consultants like BBG for evaluations was equally critical, "though they may be expensive, but with their solid experience, the expenditure is well worth it."

But is there a problem with the India Inc brand, especially when communicating to German customers? Vineet Nair, CEO of HCL Comnet answered that the issue is "not of brand, but it’s a marketing issue, a reach issue, and also an issue related to relationship (with the customer)." There can be many successful models as is already demonstrated by Aftek, whereby we can have a German face building and nurturing relationships with clients, while the actual work can be carried out in India.

Talking of promoting bilateral trade relations, Englert mentioned that the German culture was primarily responsible for the fact that not many German companies wanted to outsource their operations (in the manufacturing segment for example) to India, but now with increasing globalization, the need to take economic advantages is forcing many companies to look at countries like India.

Team DQ