Some of the country’s biggest companies, such as Belgacom, Colruyt and Dexia, have already outsourced IT activities to India – in the case of Belgacom as long ago as 1996. The attraction is not only the comparatively low rates of pay of Indian workers but also their high level of IT skills. There are still thousands of IT jobs in Belgium that cannot be filled because of a lack of qualified applicants.

An Indian consultancy, Quantum Step, has estimated that Belgo-Indian contracts in the coming year could be worth as much as €4.6 billion: €1.3 bn for infrastructure maintenance, €1.9 bn in applications development and €1.4 bn for what is called business process outsourcing (BPO), which includes call centres, HR and accounting services.

Belgacom and mobile phone subsidiary Proximus began outsourcing (or more correctly offshoring: outsourcing to another country) in 1996, a move the company said was provoked by the lack of qualified specialists here. Belgacom works with Tata Consultancy Services (TCS), which is based in Mumbai and is the biggest provider of outsourcing services in India. The company is widely seen as the pioneer of the Indian IT industry.

Colruyt also worked with TCS in the beginning but decided in 2007 to set up its own IT subsidiary, Colruyt IT Consultancy India, based in Hyderabad. The company maintains all Colruyt IT infrastructure and software, as well as working on software development.

Dexia is a more recent convert to offshoring, with contracts signed last year with Mahindra Satyam in Hyderabad and Hexaware in Mumbai, which specialises in banking and financial services. Dexia now outsources 30% of its IT to India.

While the shortage of IT people with the right skills in Belgium now appears to be structural – “Even in times of crisis it’s difficult to find people with the right profile,” one industry insider said – Indian companies are spoiled for choice. TCS employs 150,000 people and brings in $6 billion a year.

Now Europe is faced with a second wave of offshoring towards India, Quantum Step said. The supply situation in Europe is not getting better. Furthermore, Indian providers have barely begun to sell themselves to potential clients in the Benelux, Germany and France. The consultancy estimates that about 30% of a company’s IT needs can be outsourced, but only about one-tenth of that on average is appropriate for offshoring.

The new bilateral agreement is the first India has signed with a client country. It involves Indian workers employed by Indian companies who are sent here to work. The treaty allows them to hold on to their Indian social security status and relieves them (and the companies they come to work for) of the need to pay Belgian social security contributions.