French connection

Headquartered in issy-LESMoulineaux, a suburb of Paris, some 7 km from the city centre, Steria is an unfamiliar name with those curious and even familiar with India’s IT-ITES industry. This 40-yearold French firm, which has revenues of $2 billion, recently got a much closer Indian connection when it acquired Xansa, a British outsourcer last October and with it a 5,000-person presence here. “The India presence was a critical reason for the deal and now we want to double our presence here,” says Francois Enaud, Chairman & CEO, Steria.

Unlike many American tech giants like IBM and Accenture, Steria has been much more circumspect in building a large India delivery centre and it’s only the buyout of Xansa that helped it boost its profile here.

“We were an unknown until the deal,” laughs Enaud. “Now we want to make up for lost time.” Back in Europe, Steria is recognised as among the top 10 IT and BPO companies on the continent and gets around e900 million of its business from the UK market alone. “We’ve built a reputation for ourselves in the European market and we want to become a global player,” says Enaud.

Part of the reason for Steria to look beyond its staple European business is to drive growth in the company and in the slow-growing and slow-to-outsource European market. According to Enaud, the European market itself is growing at just 3 to 5 per cent annually and Steria itself is growing at under 9 per cent, compared to over 30 per cent for many of the firm’s large Indian rivals. “We have made multiple M&A deals, but we want to balance that with some significant or-ganic expansion. So, to try to ignite growth, Steria is putting in place a strategy to tap the lucrative domestic market in India and sees that as a key growth driver as it seeks to diversify its revenue base. Enaud may need to be quick on the draw, with Steria’s margins wallowing at just over 7 per cent, compared to over 25 per cent for most Indian Tier-I players.

Besides the focus on India, Enaud believes that the industry has moved away from rushing single mindedly towards India to looking for broader options in locations such as Eastern Europe and South East Asia and even places like Canada. “We recently opened a centre in Poland and we have a presence in Morocco, both of which are key for the language-sensitive European market,” says Enaud. It’s for this reason—along with the inherent conservatism —that he believes the European market will be much harder to crack than North America.

“It is now hard to build scale in the European market in one location. We have to have multiple small locations for each language and look to places like Morocco also Morocco also for French-speakers,” he explains.

— Rahul Sachitanand