Indian IT Firms Grow Revenue Faster in Europe

Indian IT and engineering service providers grew European revenue by 8.5% year on year in the January to March quarter, outpacing the 4.5% growth recorded in the Americas over the same period. Both figures beat the sector's overall quarterly average of 5.2%.

The gap is not new. It marks the fifth straight quarter in which Europe has outgrown the Americas for Indian IT vendors, and Europe already contributes around 30% of the sector's annual revenue. More than a third of new delivery centres opened by top Indian IT and engineering firms in the 2025 to 2026 fiscal year were located in Europe, compared with roughly 11% the year before.

What Changed

Three forces are hitting European enterprises at once. Cost and talent shortages are pushing companies toward fewer, larger vendor relationships and heavier outsourcing. Rules such as GDPR and the Digital Operational Resilience Act are creating compliance-linked technology work that needs local delivery expertise rather than generic offshore staffing. Underneath both trends sits an infrastructure problem: much of Europe's enterprise IT stack was built decades ago and is due for replacement.

Forrester principal analyst Biswajeet Mahapatra said Europe has historically trailed North America in technology adoption, but that companies across the region are now accelerating spending on AI, digital transformation and modernisation after several years of AI moving into the mainstream. He pointed to the age of Europe's existing infrastructure as a driver of that opportunity, a shift that echoes the AI infrastructure buildout playing out across the sector, from Nvidia's recent bond financing tied to AI chip demand to Google's new data centre expansion in Alabama.

Indian vendors have moved fast to capture the opportunity. TCS struck a partnership with Mistral, the French AI startup, positioning itself to deliver AI services built on European infrastructure rather than repackaged US tools. Infosys expanded its contract with Norway's DNB Bank and built a new marketing technology platform for Germany's Handelsblatt Media Group. Persistent Systems absorbed staff from Estonia-based Concise, and L&T Technology Services opened an engineering intelligence hub in Munich.

Acquisitions tell a similar story. HCLTech, LTIMindtree and Hexaware Technologies each closed European deals in 2026, and figures covering the top 15 Indian IT firms show that 22% of all acquisitions in both FY25 and FY26 were made in Europe. That consistency points to long-term positioning rather than one-off opportunism, not unlike the steady wave of operators positioning around Europe's next big market opening, such as the queue of iGaming operators lining up ahead of Finland's licensing launch.

EY India technology sector leader Nitin Bhatt described the shift as efficiency-led catch-up rather than a hedge against a shaky US market. He said clients face real cost and talent pressure that is driving vendor consolidation and outsourcing, with some firms now seeing a growing share of large deals originate from Europe.

Final Thoughts

For much of the past two years, Europe's growth was framed as a defensive play, a way for Indian vendors to reduce reliance on a US market facing policy and macroeconomic uncertainty. The data now points to something else. Europe's demand signals look structural, not cyclical, while the US outsourcing market has grown crowded, with more vendors competing for the same large mandates and margins tightening. Europe, alongside parts of West Asia and Africa, is increasingly where the next wave of transformation spending originates, not because North America has slowed, but because Europe has finally started moving.