Indian IT services firms are increasingly using acquisitions and local partnerships to expand their presence in Europe, targeting consulting capabilities, established clients, local talent and artificial intelligence (AI) expertise as the market shifts towards digital sovereignty and regulatory compliance.
Recent moves, including TCS’s MHP deal, Persistent Systems’ bid for Nagarro and LTIMindtree’s proposal involving Randstad, point to a strategy of gaining capabilities and market access through established businesses rather than building them from scratch.
DD Mishra, VP Analyst at Gartner, said Indian IT providers had increasingly relied on acquisitions and strategic partnerships to enter the European market between 2019 and 2026.
“Indian IT services providers are not merely expanding footprint; they are deliberately targeting key capabilities that underpin competitive advantage in Europe. These capabilities revolve around Consulting, Client Access, Talent, AI and IP,” Mishra said.
The shift comes as European companies increase their spending on AI while also facing requirements around data residency, AI governance and digital sovereignty. More than 50% of Western European enterprises have deployed generative AI, according to Mishra, while investment in agentic AI is also increasing.
European regulations, including the EU Data Act and GDPR, are pushing technology providers towards local data hosting and greater accountability over digital operations. Mishra said this was encouraging Indian providers to work with European digital and cloud companies and build services that address these requirements.
TCS launched its SovereignSecure Cloud in Europe in May 2026, combining public cloud deployments with AI capabilities while focusing on European requirements around data, operations and digital infrastructure.
At the same time, slower and more cautious growth in North American IT spending is prompting Indian providers to redirect investment towards Europe. Mishra said Europe was becoming a more predictable growth market as technology spending was supported by regulatory reforms and digital sovereignty initiatives.
The shift is also being supported by closer India-Europe economic ties. Mishra said Europe had been moving closer to India from a geopolitical perspective, while the India-EU agreement and India-UK free trade arrangement could reduce regulatory and administrative barriers for Indian technology companies.
The UK agreement could also support greater movement of Indian IT professionals and encourage more investment in areas such as secure cloud infrastructure, AI governance and local data centres, Mishra said.
The consolidation trend is also visible among Indian mid-sized IT companies. Happiest Minds Technologies is merging with ITC Infotech in a transaction that the companies said would create a business with about 90,000 employees and annual revenue of around Rs 7,000 crore.
Joseph Anantharaju, co-chairman of Happiest Minds, said the deal reflected changes in customer demand, including the need for broader capabilities and greater execution scale.
“And also, if you want to bid on these, you need to have an execution scale,” he said.
He said Happiest Minds had capabilities in AI, digital, product engineering, cloud, data and cybersecurity, while ITC Infotech brought capabilities including PLM, SAP, enterprise applications and Industry 4.0.
“I think this gives us a much more end-to-end offering and we'll be able to bid for larger deals,” Anantharaju said.
The companies also expect their geographic strengths to complement each other. Europe accounts for 31% of the combined entity’s expected revenue, while America accounts for 38% and the rest of the world for another 31%.
