Business Standard

June 18, 2006
 

Reverse flow: Indian firms get bullish on Britain

 

In a reversal of the trend where British firms took operations to India, it is the turn of Indian companies to set up shop in the UK, which receives 60 per cent of all Indian investment in Europe.

Over 430 Indian firms based in London account for 30 per cent of all foreign investment in the capital and more are queuing up, said a report in The Telegraph, ahead of the release of official figures for the current financial year in this regard.

UK Trade and Investment, the government-backed agency which encourages overseas companies to do business in Britain will reveal next month the number of Indian companies that have invested here in the year, up to April.

Last year, the number of Indian companies which launched UK operations grew by 23 per cent and there was no sign that this growth had slowed, the report said.

The growth rate is expected to be Himalayan, it said, adding that for the first time, the amount of money invested in the new UK developments by Indian companies up to March last year overtook the amount invested in India by British companies.

“There is much interest in the UK from Indian firms,” the daily quoted Anuj Chandem, international business partner at Grant Thornton as saying.

Nicolas Piramal last week announced it was buying a manufacturing plant from Pfizer, the drug giant in Northumberland. Tirupur Exporters’ Association (TEA), Tamil Nadu, will open a warehouse at Felixstowe, a joint venture with St John Freight Systems and the Indian company to supply clothing to Mothercare and GAP.

The growth in near-shoring has been equally robust. Indian companies are now employing British nationals in call centres based in the UK to do the same jobs.

ICICI One-Source, a Mumbai-based outsourcing company, last week announced it would build a 1,000-people call centre in Belfast, its first in the UK.

HCL Technologies has acquired a call centre in the area. “As we broaden our services, some components of what they want are more suitable to be done locally. A lot can still be done offshore but there are some things that are better kept closer to home,” Matthew Vallance, ICICI’s Managing Director for Europe said.

Call centre activity in the UK is growing by 5.5 per cent a year and is expected to employ more than one million people by 2007.

Phiroz Vandrevala, executive vice-president, Tata Consultancy Services, the first IT company set up here in 1975, said English language provided a common thread between the two nations. TCS recently formed a subsidiary in Peterborough to provide call centre service for Pearl, the closed-fund life assurance group.

Grant Thornton’s Chande was quoted as saying that the large Indian community in the UK has acted as a spur to investment.

“There is a significant Asian community in the UK and a lot of Indian companies have links in terms of relations to business contacts. Many Indians find it more comfortable to deal with the UK. There is cultural empathy,” he added.

Avestha Genraine, a Bangalore-based healthcare technology group that employs 215 people opened an office in Cambridge in 2004.

Pierre
Socha, Avestha’s vice-president, corporate development, said although the UK office employed only three people, deals generated in Cambridge accounted for 35 per cent of the company’s entire revenue last year. “It works pretty well,” he added.

Paul Witeway of UK Tade and Investment said there were broad economic reasons for the Indian influx. “We have a stable economic framework, flexible labour laws and a skilled labour force.”

UK Trade and Investment is working overtime. Not only does it have teams in New Delhi, Mumbai, Bangalore and Kolkata, its website lists the benefits of doing business in the UK. Whiteway said 19 Indian companies were listed on the London Stock Exchange, more than on the New York Stock Exchange and Nasdaq combined.