Why Indian IT services companies are seeing healthy deal traction in Europe?

Indian IT services companies are seeing strong deal momentum and traction in the European market compared to the US market over the last few months. As per media and research reports, Indian IT services companies such as TCS, Infosys, and HCL Technologies have done well in the region. Compared to this, the US market has been relatively flat due to uncertainties in the market. Many European companies are looking at cost optimisation solutions in order to have better control and efficiency of resources.

As per the US-based research firm HFS Group, IT deals from the European market rose by around 5 per cent compared to the previous market compared to the US market which remained at just 2 per cent. “European IT services demand has stayed comparatively stronger than North America over last several quarters. We believe this trend will continue in the coming quarters.

“From the demand lens, European enterprises are being much more open to new age tech and outsourcing services. The region is also relatively better positioned in terms of macro dynamics and the recent developments have created high-growth potential tech hubs like Germany. We are seeing some peculiar hot pockets of pie expansion like demand from mid-market enterprises and other first-time outsourcers who are optimising costs through leveraging offshore locations, creating opportunities for Indian IT services players,” remarked Prashant Shukla, vice president, Everest Group.

He adds that the demand is also fuelled by regional focus of tech platform players like hyperscalers, who are making large investments to cater to the data and regulatory requirements of the region, creating potential for downstream services revenue.

Experts do point out that the multiple factors are responsible for this deal momentum. “In the US, tariff uncertainty and ongoing geopolitical tensions have led to a cautious outlook. Many companies are in a wait-and-watch mode, delaying major technology investments, large deals, and even hiring plans. The macroeconomic environment has made decision-making cycles longer, especially for discretionary spending,” Aditya Narayan Mishra, the CEO and MD of CIEL HR told THE WEEK.

He further says that the European market is also offering more stability at this point. “Several European enterprises are accelerating their digital transformation agendas, particularly in areas like cloud, cybersecurity, and AI. Indian IT firms, with their strong delivery models and near-shore presence, are well-positioned to capture this demand,” added Mishra.

As per market reports, Tata Consultancy Services (TCS) signed six deals in Europe since March. On the other hand Infosys has apparently partnered with Allied Irish Banks and the UK’s Yorkshire Building Society. HCL Technologies has also got an engineering services contract with Swedish truckmaker Volvo. L&T Technology Services and Tata Elxsi each has also signed Euro 50 million contracts with European automotive clients. Interestingly Wipro has also appointed a new CEO for its European strategic unit for driving growth in the region.

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