Tumbling Euro Adds To European Clients' Offshoring Hurdles

In 2009 Forrester's research showed Continental European firms' increased interest in offshoring. We observed many German, Nordic, Dutch, and French companies engaging with Indian providers, possibly signaling a longer-term shift toward higher adoption of low-cost resources for IT services. However, recent developments in the European economy in light of the Greek debt crisis coupled with the highly volatile euro are set to spoil the offshore party. This time it will be services providers who will be less interested in Continental European business because of how it will impact their profitability. IT services buyers need to ready themselves for midterm and even unplanned negotiations with Indian providers who may demand billing rate hikes to protect their margins as well as new clauses to handle currency fluctuation in efforts to mitigate their own risk.