EU's RE focus to benefit Indian IT

Bengaluru: European nations' rising spend on renewable energy (RE) sector is throwing open many opportunities for Indian IT industry, especially for engineering services companies. According to company officials, many multi-million-dollar deals are likely to come on the way of these specialised players in coming quarters.

"What I can confirm is that our industrial product growth has actually come from electrification of customers. Secondly, there is an interesting concept of V2X, in which vehicle will generate electricity and generate back to the grid. There are also many initiatives being taken in generating electricity from solar energy. Therefore, we see a lot of traction in that space (in European region)", Amit Chadha, CEO &MD of L&T Technology Services, told Bizz Buzz. "These initiatives are not only taken in Europe, but also in the US. So, the opportunity is huge and yes, we are participating," he added. Amid the ongoing Russia-Ukraine war, most European countries under the EU have imposed strict sanctions against Russia. Moreover, these countries are planning to end their dependence on Russian oil and gas in a time bound manner as part their opposition to Russia's war on Ukraine.

As per European Commission, it has proposed that 45 per cent of the EU's energy mix should come from renewables by 2030 from current 22 per cent. To achieve this goal, governments and companies are aggressively spending on renewable energy projects.

According to some estimates, Europe will require $3.8 trillion worth investment in power generation projects – especially wind and solar- in the next three decades. This is leading to new opportunities for Indian IT companies, especially in engineering services companies. Companies with solutions in IoT (internet of things), ML (machine learning) & other emerging technologies are likely to cash in these emerging opportunities. Indian engineering companies like L&T Technology Services, Tata Elxsi, Cyient, and IT firms with strong engineering services wings such as HCL Technologies and Wipro are likely to be major beneficiaries of such increasing spend.

Europe as a geography has seen increasing focus from Indian IT companies as they are looking for diversifying their revenue sources. Currently, more than 50 per cent of revenue of Indian IT companies is coming from the US with Europe contributing less than 30 per cent for most of them.

To reduce their dependence on North America, many IT firms have set up centres and acquired local companies to increase footprint in this region. Moreover, Eastern Europe has emerged as an important delivery centre for some companies as they look at servicing clients in Western Europe and the US, using these nations as near-shore centres.