Europe is emerging as the next growth market for Indian IT service providers, with the region accounting for more than a third of new delivery centres opened by top companies last fiscal as it continues to outpace the North American markets.

From TCS and HCLTech to Persistent Systems and L&T Technology Services (LTTS), Indian companies are increasingly making strategic tie-ups, setting up AI labs and pursuing acquisitions in the second-largest revenue-generating region.

According to data from tech consultancy firm EIIR Trend, 35% of the delivery centres from top IT and engineering service providers launched in 2025-26 were in Europe, compared with just around 11% in 2024.


“The growth in Europe is less about hedging North America and more about an efficiency-led catch-up,” said Nitin Bhatt, technology sector leader at EY India. “Clients are under real cost and talent pressure, which is driving vendor consolidation and more outsourcing, and some players are seeing a larger share of large deals come from the region.”

Bhatt noted that companies are increasingly using AI for productivity, compliance and modernisation work within European regulatory frameworks such as GDPR and the Digital Operational Resilience Act (DORA). This is creating demand for localised delivery models, sovereign cloud capabilities and modernisation of legacy technology systems, he said.

Earlier this month, Persistent Systems integrated employees from Estonia-based IT company Concise, while LTTS unveiled an engineering intelligence centre in Munich.

The focus on the region comes in as service firms recorded faster revenue growth in Europe for the fifth consecutive quarter in the January-March period at 8.5% year-on-year, as per a note from Kotak Institutional Equities, compared with 4.5% growth from the Americas.

The region’s growth outpaced the overall revenue growth of the companies in the quarter as well, gaining 5.2% year-on-year for the three-month period. Europe typically contributes around 30% of the annual revenue of IT companies.

India’s two largest Indian IT service providers, Tata Consultancy Services and Infosys, for instance, announced at least three deal wins/ renewals or product launches each in Europe just last week. TCS also announced a strategic partnership with Mistral, Europe’s leading AI startup. Infosys has expanded its contract with Norway’s DNB Bank and launched a marketing platform for Germany-based Handelsblatt Media Group.

Meanwhile, HCLTech, LTM (formerly LTIMindtree) and Hexaware Technologies have acquired companies in Europe in 2026.

Data from UnearthInsight shows that 22% of acquisitions across the top 15 Indian IT firms were made in Europe in both FY25 and FY26.

While Europe has historically adopted technology slower than North America, companies in the region have started investing big in artificial intelligence, analysts said.

“Europe has historically been a laggard compared to North America in adopting new technologies. But after three to four years of AI becoming mainstream, companies in the region are accelerating investments in AI, digital transformation and modernisation,” Biswajeet Mahapatra, principal analyst at Forrester, said. “Much of Europe’s technology infrastructure is still relatively old, which is creating significant opportunities.”

According to Mahapatra, the US market has become crowded for IT vendors, while Europe, West Asia and Africa are opening up new outsourcing and transformation opportunities.