Looking back in time, it was UK, the bete noir of every Frenchman, who led the trend in outsourcing to India. A decade ago, British Airways made a decision to move its back-end business processes to the shores of India, a move that now has a couple of French big name companies passionate about the idea of cost reduction associated with shipping work to the sub-continent.
CapGemini, a consultancy firm and Atos Origin, an IT company with its head-quarters in Paris have shown an extreme keenness to ramp up their Indian operations by buying an Indian service provider each. Advice from business consultants and the need to cut costs to remain globally competitive has spurred both the French firms to increase their presence in India.
This is, indeed, a new trend for French information technology firms, who for long have resisted off-shoring / outsourcing, instead, preferring a near shore approach. An approach that is still favoured by most IT service users, but slowly large enterprises in France are showing an inclination to move to a more generalised form of off-shoring / outsourcing.
Compared to some three years ago, Sitra, a Finnish research agency reports, 75% of French companies are deliberating on sending software development work offshore, and India is very much on their minds.
Only recently, CapGemini announced its decision to up its headcount from 2000 employees currently on its payroll in India to 10,000 by year-end 2005. A five-fold increase that is only possible if they are acquiring an already existing player. On an acquisitory scouting mission last year in India, CapGemini came very close to purchasing Mphasis, a full service IT Company based in Bangalore. But, in an overheated IT services market, the French firm found the Indian company s valuation rather high. With an employee strength of 8,000, its valuation a fraction of IT giants such as Infosys and Wipro, $128-million revenues in 2005, Mphasis is still a very attractive acquisition, and might well end up in the lap of an interested suitor.
And, having won the Renault contract over a long-time supplier -Unilog, Atos Origin is proof of the pudding that the big names of French industry, especially in manufacturing are looking at cost reduction from local IT service providers by way of off-shoring / outsourcing.
The French change of heart on the subject could well be in response to a recent McKinsey report on the effects of outsourcing urging them to capture the benefits of the trend. Advice which has French firms hot with desire to off-shore IT and IT-related work to India, one of the maturest players in the field with ability to deliver. The McKinsey report further states: French companies have been slow to offshore service functions because of practical hurdles and regulatory constraints. They have so far resorted to alternatives such as developing shared services, re-engineering their operations, and outsourcing work locally. But, as global competition heats up, they will probably follow the lead of their U.K. and U.S. competitors in off-shoring.
Historic rivals, the French and British having both descended on India, it seems the fun has only just begun. Ere long, they will try to outdo each other, hurling abuses at each other, ., pardon my French. Perhaps, to the ultimate benefit of India. Raise a toast and let s just say Cheers and A Votre Sante to that!
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