Tuesday, December 27, 2011

Krakow: The Next Big Thing in Outsourcing

Poland is a key market for software outsourcing in Eastern Europe and a favorably located entryway into the region with the business style and culture that has a lot in common with Western Europe and North America. Poland's highly concentrated IT marketplace is one of the most preferred outsourcing destinations nowadays increasingly attracting overseas attention.

Poland’s Krakow, commonly referred to as Europe’s “Silicon Valley”, represents Central and Eastern Europe’s technology hub. The city is the second-largest in the country and is one of its most important economic centers. Krakow is viewed as an optimal choice to conduct business, also proved by such global leaders as IBM, Capgemini, HCL, Hewitt, LogicaCMG, Philip Morris International, AES, Microsoft, who have their offices in the city. All in all, firms from the outsourcing sector employ 16,000 workers in 50 development centers within the city.

Established back in 1998, Krakow Technology Park (KTP) is one of the most significant factors of Krakow's investment attractiveness. KTP is the city’s high-tech powerhouse harboring 15 higher education institutions and over 140 research centers. Special conditions are provided for investors in the branches of IT, electronics, communications, software and hardware, and material engineering.

The intellectual potential of Krakow is supported by 22 universities and 210,000 students in higher education – more than 30,000 new graduates a year, of which 8,000 are IT sciences graduates. There are altogether 8 universities in Krakow with IT degrees, among which the AGH University of Science & Technology and the Cracow University of Technology are the largest.

The demographic potential is another benefit of Krakow – approximately 8 million people live within a 100 km radius of the city. It is noteworthy, that about 60% of the city inhabitants are under the age of 45.

Many European IT companies chose Poland as their preferred outsourcing destination because of the communication, cultural, territorial, and quality issues that they find an essential advantage in software and IT services outsourcing. Poland is the country that is able to respond to most challenging IT outsourcing issues even for most demanding customers.

Source: Global Services

Wednesday, December 21, 2011

Ukraine as an Outsourcing Hub

Ukraine is named among the most promising destinations for the future of outsourcing. Strategically located in the center of Europe and geographically close to major European clients, Ukraine offers cost effective, but highly qualified workforce, rapidly improving infrastructure with the upcoming EURO-2012 football tournament, favorable investment climate, and cultural similarity.

IT services sector is one of the cornerstones of the Ukraine development strategy and one of the priority branches. For several consecutive years, Ukrainian IT outsourcing industry shows sustained growth, in spite of the dramatic fluctuations on the global financial market. For the last five years the volume of the Ukrainian IT services export has doubled – reaching today’s $ 1 billion, which makes it is the fifth in the world. It is a good prove of the industry’s potential and a weighty argument for launching long-term projects in the region.

Ukraine is also distinguished by a high level of technology skills and scientific potential. Each year more than 30,000 new specialists graduate from Ukrainian universities; technology and engineering branches are among the most intensively studied. Since the country was a major hub of scientific research of the Soviet Union (40% of the total share), there is deep heritage of strong skills in software engineering. Ukraine boasts strong potential for supplying highly qualified and well-educated workforce with innovative and creative thinking to develop new products and solutions. Moreover, IT engineers have European mindset and good English skills which facilitate everyday communication and help them better perform tasks.

The outsourcing industry is particularly well-developed in the country’s biggest cities: Kyiv, Kharkiv, Lviv, Vinnytsia, and Dnipropetrovsk. Ukraine is constantly trying to improve its capacity to better accommodate IT needs, and is likely to become soon a major destination for software outsourcing in Central and Eastern Europe.

Tuesday, December 20, 2011

Technical Talent as the Biggest Stake in Outsourcing

Shortage of IT and software engineering graduates is one of the underlying factors in outsourcing. Companies seek for comprehensive engineering skills and at affordable prices. But where to look for? India cannot provide the required quality – it’s good for BPO services, but in complex software engineering India is still way behind; China is too insecure and cannot yet boast outstanding programming education heritage; South America is not yet mature enough. On this occasion, Russian development capabilities and its internationally renowned strong education system become an unbeatable advantage. Russia's competitive advantage lies in its fundamental engineering education with strong focus on science and math.

Russian software engineers are frequent winners of the highly prestigious ACM International Collegiate Programming Contest, were they are repeated gold medal honorees. The Russian programmers' engineering talent lies in their ability to overcome challenges and solve complex tasks with creativity and innovation.

Coupled with nearshoring opportunities and convenient time zones, cultural similarities, and stringent data protection regulations in the sphere of software engineering, Eastern Europe and Russia may soon reach the status of a global ITO superpower.

Moreover, the information technology sector in Russia enjoys strong government support and the country’s political leaders always try to promote the country at an international level and highlight its assets. Striving to boost its offshoring industry, the Russian government has introduced a set of tax incentives for companies delivering software products and services for overseas markets. Russia holds an investment-grade credit rating from Moody’s Investors Service and Standard & Poor’s and a stamp of approval from the World Bank and other international agencies making it an attractive location for international investment projects.

Placing a stake on technical talent, Russia's software development market definitely has vast potential and bright future in the outsourcing segment.

Monday, December 19, 2011

Trends in Outsourcing – Eastern Europe Keeps Ground

2011 has been a favorable and intense year for the European outsourcing market. Western European countries and the UK confidently forge ahead and strive to occupy a bigger share in the global ITO market, challenging the United States. Let’s look at the major trends of the declining year that shook the outsourcing market segment in Europe.

An increased demand in outsourcing services from Western clients position Eastern Europe as a major nearshore destination. The opportunities here are huge, yet relatively untapped. With a history of deep dedication to science and engineering education, rising economies, and other compelling advantages in outsourcing, Eastern Europe has got all the potential to be a key player in the ITO branch. According to the recent survey from IT Sourcing Europe, the most attractive locations for the outsourced nearshore IT development are Ukraine, Poland, Romania, Hungary, Belarus, and the Russian Federation.

As for other tendencies dominating the market, a recent Forrester’s report “Market Overview: European IT Infrastructure Outsourcing” emphasizes cloud-based services as the driving force of the software market. The BPO space is flourishing in both voice and non-voice operations – leveraging the multilingual capabilities, call centers continue to rise. Other BPO processes like F&A are also seeing a lot of activity.

Other key trends include:
• Deepening of niche capabilities and high end IT solutions;
• Expanding of operations in new emerging locations;
• Capturing of the untapped IT talent pool in Eastern Europe.

Source: Global Services

Friday, December 16, 2011

How to Leverage SAP Advantage for Your Development Needs

Taking into account the popularity of SAP products and solutions among advanced enterprises and the steadily increasing demand in SAP-based applications, obviously implementing SAP is a technology upgrade, but at the same time you may come across multiple blind spots when trying to sort through a gamut of SAP’s products and technologies. Whether an SAP customer or an SAP development partner, the first question that you’d have to raise is which technology or development language will best suit you and your company and what will be best option for your business needs. In our today’s post we’ll touch closer upon two programming languages – ABAP and Java – and will try to contradistinguish them: why choose one and why the other, for which needs, which has better future, etc. So, how to determine which language and technology is the best fit from all SAP’s offerings and is more likely to bring ROI? And how to leverage the strengths of these essentially complementary technologies?

In most cases, the choice rests on the project’s individual criteria and relevance of this or that technology for business needs. The first question to ask at the very beginning of the decision-making process is what you need and what is your particular demand in each specific situation – this is the main drive of choice. While on the one hand choosing the right platform, technology, and application depends on your specific needs, there are some considerations on the other hand that overlap and are relevant to any project, where the decision boils down to a kind of trade-off (e.g. fast development versus compelling user experience, or performance versus full-blown information display).

In the consideration of whether to implement ABAP or Java, the most important thing to understand is that it is not a choice of which technology is better, and there’s no simple algorithm that suggests you a better option. You need to understand, that SAP leverages the strengths of both the ABAP and Java programming languages in its technology platform, and clients may safely rely on either language for their development needs.

ABAP is SAP’s default programming language for both on-demand and on-premise business applications. It runs on SAP NetWeaver Application Server, which is robust and safe, and appears with an integrated development environment and a complete toolset that supports the whole life cycle. This is a definitive advantage, especially taking into account that support costs may constitute up to 60 percent of a business application’s costs. By choosing ABAP you may rely on highly scalable and reliable lifecycle management for the IT landscapes of large enterprises, as well as integrated source code management and tools to support installation of add-ons and upgrades.

At another point, Java is a widely-used programming language in the development community and is popular in many open source initiatives. SAP uses Java for integration topics, portal and integration solutions, collaborative scenarios and products, and many analytics solutions. Some of SAP’s Java-based products include SAP NetWeaver BPM, SAP NetWeaver Portal, SAP NetWeaver Composition Environment, and Sybase Unwired Platform.

Whether you opt for ABAP or Java (or you vote for a mixed solutions), you have to keep in mind that both play an important role in the SAP development portfolio and SAP promotes both languages. With this in mind, it doesn’t matter whether you implement a solution in ABAP or prefer model-driven development with SAP NetWeaver, you will definitely receive the highest levels of security, support, and comprehensive lifecycle management, because it confidently meets SAP standards.

Source: SAP Insider

Read more at EPAM Delivers Expert SAP Development Services for a Global Manufacturer

Tuesday, December 13, 2011

Destination Poland: Why More Businesses are NearShoring in Central and Eastern Europe

The Polish Association of Business Services Leaders (ABSL) – the biggest outsourcing companies' association in Central and Eastern Europe – forecasts that in 2-3 years Poland will became one of the outsourcing sector's leading nations on the continent. The rising demand in nearshoring services continues to drive growth and investment inflow, promoting Poland as a reliable business partner and a competitive outsourcing destination among international counterparts.

“Market instability enhances the sector in Europe, especially in its East-Central part – financially attractive, but still secure within the borders of EU – where Poland has a strongly entrenched leading position,” – noted Jacek Levernes, President of the ABSL. “I can say that the interest of clients from around the world is growing and might be even bigger than we expected.”

The major advantages of the region consist in significantly lower costs of human capital and stringent security regulations. For example, according to a recent LSE study devoted to the research of the global market in the segment of software development, Poland occupies leading positions in several crucial categories:

• IT/BPO Environment (government backing, compatibility with the prevailing business culture, quality of life and accessibility) – Poland is #1;

• Quality of Infrastructure (telecommunications, power, transportation and real estate) – Poland makes the top 5;

• Risk Attractiveness (personal security, disruptive events, regulatory risks, macroeconomic risks and intellectual property protection) – Poland is a runner-up;

• Market Potential (a country's future attractiveness as an offshore location for IT and business services) – Poland is second best.

See more at Global Leaders Pick EPAM as Top NearShore Opportunity

Monday, December 12, 2011

SAP Solutions in Central and Eastern Europe Pick Up Steam

At the end of November 2011, SAP AG, a leader in business management solutions, software, and services, announced a significant NearShore expansion. The company plans to fundamentally boost its Romanian operation (with an organic growth up to 400 consultants by 2014) and improve its consultancy services to customers across Europe, the Middle East and Africa (EMEA).

Director of the SAP NearShore Center Romania, Gheorghe Olteanu, reasoned such heavy investment plans by the “scalability, good universities and language advantages” of the CEE region. “Moreover, Romania is the third largest country in Europe and part of the European Union. Of course, the lower level of salaries in Romania compared to the Western market that we are serving is also advantageous for us. The salary a consultant starts on is at least twice the average salary in Romania,” added Gheorghe Olteanu.

The SAP NearShore Center is planned as a comprehensive facility with highly professional SAP consultants and developers on board capable of performing most complex engineering activities. The center primarily targets support of customers in Western Europe and better project delivery in such countries as Austria, Belgium, Germany, Luxembourg, the Netherlands, and Switzerland. SAP solutions in Eastern Europe enjoy a high reputation worldwide due to immanent high quality implementation and high standards of delivery.

Source: Business Review

Friday, December 9, 2011

Redefining the Role of Outsourcing in Travel

By estimations of most independent analysts and analytical agencies, one of the world's largest industries – global travel and tourism – is going to experience growth in the upcoming 2012. According to PhoCusWright, a global travel market research company, the overall travel segment grew last year at 7%, and is forecasted to show further significant growth. The positive tendency is largely powered by modern technologies and the ease and accessibility of online travel that leapfrog the industry forward. Advanced search engines, mobile phone applications and social media recommendation sites all revolutionize the ways we used to plan our trips and mark the high-day of a new age in the travel industry.

The software and IT services companies engaged in travel software development continue to see good demand growth. Travel companies are constantly looking for new ways to improve user experiences for target consumers and create a more personalized approach. Ultimately, suppliers want to make sure that clients gain more value with them than with competitors.

In the global rivalry of IT vendors to demonstrate best practices in travel software development, Eastern Europe occupies one of the leading positions. Vast talent pool and engineering expertise, multiple language capabilities, stringent data protection laws, as well as favorable cost factors and cultural fit make Eastern Europe a convenient option and a preferred nearshore outsourcing destination for most Western European clients.

It is time for the travel industry to be more innovative and attractive for consumers and the travel suppliers can’t afford to miss out on such opportunities.

Monday, December 5, 2011

Eastern Europe: a Land of Promising Opportunities

A unique fusion of factors and favorable conditions make Eastern Europe the next big thing in outsourcing. The region has been definitely attracting a lot of attention lately as a software development hot spot. The cultural, geographic, and linguistic barriers are significantly lower than in other parts of the world creating excellent opportunities for US and EU clients and luring them into opening offices in Eastern Europe at a rapid pace, partnering with local software companies, and establishing joint labs in the region.

Eastern Europe holds a leading position on the global arena as the most attractive location for outsourcing challenging and sophisticated product and application development. Western clients are increasingly tapping local talent not just for cookie-cutter engineering solutions, but for R&D work and mission-critical software development. Eastern Europe undoubtedly has all the potential to become a major player in the outsourcing segment.

In its latest European IT Outsourcing Intelligence Report, Forrester rated key CEE countries on a 5-point scale, where Ukraine and Poland emerged as obvious market leaders scoring 4,3 and 4 points respectively. None of the rest countries in the region – Russia, Belarus, Romania, and Hungary – scored under 3.

Below we cite an extract from the Forrester’s European IT Outsourcing Intelligence Report highlighting profiles of several CEE countries with their key strengths.

Ukraine:
• Most attractive destination for nearshore software development;
• Low IT salaries, strong R&D, high tech education, innovation, and abundance of IT resources;
• A cost saving of 40-60% compared to inhouse IT spending.

Poland:
• Maturity in BPO markets;
• Excellent place for Business Analytics, HRO, multilingual contact center operations and F&A;
• Krakow, Poland’s second largest city, is in the Tholons’ List of Top 50 Global Emerging Outsourcing Cities.

Hungary:
• Attractive for nearshore IT development;
• Mature BPO market with strong focus on HRO;
• The country’s capital, Budapest, is 7th of 25 safest cities for offshore/nearshore outsourcing.

Russia:
• ITO market value higher than other three countries;
• The country is in Gartner’s List of Top 30 Outsourcing locations;
• Specialized skills in engineering design and R&D services.

Source: Global Services

Friday, December 2, 2011

The Glory Days of Indian Outsourcing Succumb to NearShore Opportunities

Traditional cost-based thinking in software outsourcing is obsolete and almost dead, state numerous analysts and IT business leaders. Current market conditions and customers' demands shift to more innovation and greater value from outsourcing vendors and move value-rich providers up in the rank while leaving India way behind.

Moreover, salaries in India and the region have increased about 15 percent this year, according to the latest October statistics featured in Forbes. And although low-cost IT services have made the Golden Age of India in the past, nearshore Eastern European providers such as Russia, Ukraine, and Poland are snapping at the heels and threaten to eliminate India's cost advantage soon.

Poland, for example, has been attracting much interest lately due to rapid growth rates and favorable market conditions and investment climate in the country. Poland, the sixth-largest EU economy and a new growth engine in the region, witnessed a sharp recovery in GDP (gross domestic product) growth rate of 3.8% in 2010, up to 1.6% on 2009, and quarterly GDP growth has averaged nearly 4.4% since mid-2010, the fastest among European countries. On top of the economic and political stability, nearshore providers offer geographical and cultural proximity, high local education levels, and growing labor pool in many cases. All this creates business attractiveness and sweet conditions for the outsourcing market.

In the tech sector, Poland is particularly strong in Cloud Computing services, which are currently in high demand in the segment of software outsourcing. Poland was valued at just over $35 million in 2010 in the cloud computing market segment, which is up to 7 percent of the country’s IT outsourcing market, according to a report prepared by the research firm IDC. Moreover, IDC forecasts that the sector is expected to grow at an average annual rate of 33 percent between now and 2015, making it the fastest growing sector of the Polish IT market.

The overall IT services market in Poland is expected to grow at a rate of 5 percent annually until 2015.

Sources: San Francisco Chronicle and The Wall Street Journal

Thursday, July 7, 2011

Gartner Updates Annual IT Spending Forecasts

The world's leading information technology research and advisory company Gartner has recently issued updated forecasts for the global IT spending. According to the new estimates, the worldwide IT spending will grow 7.1 percent this year to US$3.7 trillion, which is 1.5% higher than previously anticipated (Gartner’s previous forecast was of 5.6 percent). The growth is largely attributed to cloud migration and increased spending on software and IT services.

Below we also summarize the spending forecasts as to the IT segments:

• Hardware spending is expected to grow at a rate of 11.7 percent to $419 billion (this is slower than last year's growth rate of 12.1 percent).

• Spending in the software and IT services segments is largely driven by the growing adoption of public cloud services and software-as-a-service. On a percentage basis, spending on IT services will more than double, growing by 6.6 percent to reach $846 billion. Last year, spending on IT services totaled $793 billion, growing only by 3.1 percent. Software spending is expected to grow by 9.5 percent year-over-year to $268 billion, Gartner said.

• Spending on telecommunications will increase to $2.1 trillion, growing year-over-year by 6.9 percent.

Source: Computerworld

Thursday, June 23, 2011

Cloud Market to Reach $121 Billion in 2015

According to research data, the cloud services market has already surpassed $37.8 billion and is continuing to grow towards $121.1 billion in 2015.

The continual growth of the cloud market is absolute related to the explosive development of “end products”. It is expected that due to universal mobile device usage, the number of total internet users will increase to 10 billion in only another 10 years. With industry needs and each national government’s promotion, it can be said that cloud computing has truly entered its stage of growth.

IDC’s recent report further reaffirms the growth in the virtualization space. As per IDC, with shipments of virtualized servers growing at a compound annual growth rate (CAGR) of 14% from 2009 to 2014, it is expected that the robust growth in server virtualization will continue through 2014 as datacenter adoption is increasingly considered mainstream in mature economies and as organizations in emerging regions look for datacenter efficiencies. With datacenter consolidation, along with the rise of cloud computing, virtualization and virtual desktop infrastructure, more and more computing power and data itself are moving into virtual world.

The prospects of the cloud market are looking promising, attracting investment from many different sources, so at this time, everyone can acknowledge that using cloud computing will allow data transmission to become quicker and more easily managed.

Source: Global Services

Friday, June 17, 2011

IT Outsourcing in Contemporary Russia

The current state of IT and outsourcing industry in Russia is on the uprise. Just consider the following fact: the average rate of growth of Russia's economy is significantly lower than the rate of growth of IT.

The financial crisis, which occurred over two years ago, forced clients to reconsider their attitude to "the impossibility of outsourcing critical functions of IT". Most businesses took another look at the age-old practice of outsourcing and had to acknowledge that the last decade significantly changed the IT industry. The heads of IT departments stopped fearing losing company value by outsourcing some functions. Outsourcing has progressed to a level that would have been reached otherwise in three to five years, had the financial crisis not occurred.

The main difference between Russian and Western IT outsourcing remains in the absence of mutual trust between the outsourcer and the consumer in Russia. Furthermore, the success of the Western service provider is based on the high level of innovations and the originality of the service. Lately the most popular topics for discussion have been cloud technologies and rendering services according to principles SaaS (software as a service), PaaS (platform as a service) and IaaS (infrastructure as a service). These new approaches, on one hand, will bring a new wave of interest from a growing number of clients, and on the other — a wide range of offers from outsourcing companies. Without a doubt, there will be unique cases in working with each individual model, and every implementation would have to take into account all particular features of the client: specifics of the business, level of infrastructure and quality of personnel. But the commonality of all these cases will be the increase in mutual trust and responsibility of the outsourcing company for the result of the service project.

Today more than a half of clients feel that they must switch to the outsourcing model in the nearest future, and more than one-third already have some level of service agreements and are planning to expand them by implementing new types of services in software development, testing, and maintenance and support. Russia is wide open to all new opportunities in outsourcing.

Source: The Moscow Times

Monday, June 13, 2011

Excellent NearShoring Choice – Ukraine

The long-established popular offshoring location India is steadily yielding to more attractive NearShore hubs like Russia and Ukraine. Why is NearShoring becoming a preferred choice of outsourcing customers? Why does Central and Eastern Europe lure more IT projects and thrive on the global arena?

In our today’s article we’ll take a good look at Ukraine and scrutinize its outsourcing potential as an advantageous NearShoring option.

First and foremost, in terms of the growing volume of offshore software development, Ukraine’s outsourcing potential is rooted in its deep skilled talent pool. Due to its technical expertise, the country gets a serious competitive advantage on the global arena attracting more mission-critical software implementation projects and complex consulting engagements. Figures from the Ukrainian Hi-Tech Initiative, the country's outsourcing software development alliance, reveal Ukraine's outsourcing industry is estimated to have grown by 20% in 2010.

However, growing technical expertise and demand for developers has led to increasing labor costs. According to the European Business Association (EBA), the monthly earnings of IT specialists in Ukraine have risen by $300 to $1,500 since 2010. In 2005, a monthly pay was just $500. Although even considering the significant pay rise, Ukraine still remains far cheaper than most countries in Western Europe. The country's biggest asset remains in its educated young people, who are not easy to find elsewhere even for real big money. "Many speak English and are internet literate. Companies employ these youngsters, and that's why they thrive," noted Michael Borg-Hansen, who has worked as Danish Ambassador in Ukraine since 2009. "You have to be really resilient in business to make it here, but it's the same case in a lot of emerging economies."

Source: ComputerWeekly

Friday, June 10, 2011

Collaborative Sourcing As a New Transformational Approach

Is outsourcing outdated? Yes, collaborative sourcing is currently on the rise.

Application collaborative sourcing is a delivery framework that provides ongoing development and maintenance of an enterprise's full application portfolio. The framework model provides a platform to drive innovation and focuses on time-to-value while introducing working collaborative practices to get critical business functionality into production at a fast rate.

A core theme of collaborative sourcing is improving the business's capability to compete on time. The collaborative sourcing argument is that if we wish to accelerate time-to-value, we need to measure factors of time at the lowest levels of granularity possible.

Collaborative sourcing accelerates time-to-value. Through a set of Web 2.0 technologies and an integrated set of processes, collaborative sourcing focuses on cycle time (elapsed time) and speed (hours vs estimate) as the principal metrics for measuring performance.

Staff behaviors are directed toward competitive, time-based outcomes when not only development methods, but also the talent model and recognition systems, are calibrated on time-based measures.

Collaborative sourcing is a true transformational approach to an enterprise's applications development and maintenance strategy. In addition to providing the mechanism to realize the benefits of global delivery and continue significant cost reductions, collaborative sourcing creates the engine to accelerate time-to-value. Rather than focusing almost exclusively on cost takeout, collaborative sourcing refocuses a CIO's capabilities and resources toward adding value to the business through accelerated time-to-value and outcomes-based measurement processes.

Source: Global Services

Wednesday, May 18, 2011

Why Russia and Ukraine are Hot Sports for Financial Technology Outsourcing

During the last decade, the Central and Eastern European region has been steadily gaining momentum as a hot spot for IT services and software outsourcing. Such leading high-tech firms as Intel, Sun, IBM, and most recently Google have long recognized the region as a lucrative destination. What makes CEE attractive and why companies should put it on the list of preferred outsourcing hubs? In our today’s post we’ll try to analyze two countries which are particularly strong in software development – Eastern Europe’s Russia and Ukraine – in terms of financial technology outsourcing.

The basic criteria that both high-tech and financial firms look at when evaluating an outsourcing destination are largely the same: labor market, infrastructure, legal/IP protection, local risks and cultural/work ethics flavor. Although one important, but often overlooked, detail that make outsourcing for financial companies more difficult is industry-specific knowledge – in today’s fast-paced world, even outstanding technology skills are often not enough.

Industry-specific Knowledge. Russia’s profile as a financial center steadily rises. Many popular products, including portfolio systems, FIX engines, and analytical and risk management packages have been and continue to be developed in the region. While Russia does not yet have big-hit stories like i-flex, there is a surprising number of leading financial technology firms who do development in Russia, which is a positive trend showing the region’s vast potential. Ukraine is also changing its image attracting more and more global financial leaders like Barclays Capital as the latest example.

Labor Pool and Costs in Russia and Ukraine. CEE’s advantage is in its cost-effectiveness coupled at the same time with high standards of delivery. The main source for qualified IT labor is universities with 50-70% of the labor pool composed of computer science and math graduates. The best technical universities are based in cities that participated in the state-sponsored Soviet programs of cybernetics studies: in Russia such key centers are Moscow, St. Petersburg, Novosibirsk, Nizhniy Novgorod, Yekaterinburg, and Tomsk; in Ukraine the key centers are Kiev, Kharkov, and Lvov. Moscow tops the chart for labor costs, St. Petersburg follows closely with 10-20% lower rates. In more rural areas, average engineer salaries may drop as much as 50%. Ukrainian IT salaries are slightly lower than in Russia but vary by region.

Security and Intellectual Property Risks. Contrary to popular belief, Intellectual Property is highly respected among IT providers both in Russia and Ukraine. Both countries have recently upgraded their IP laws making them compatible with the Western tradition.

All in all, Russia and Ukraine are known as excellent R&D destinations for a good reason – superior technical talent and a can-do attitude for the most complicated tasks. Basic operational commodities, such as reasonable costs, reliable infrastructure, telecommunications and a legal system are now widely available throughout the region and attract more global financial firms.

Source: ITO News

Monday, April 25, 2011

Tips for Successful Re-sourcing of IT Deals (Part II)

In our today’s post we continue to give tips for successful re-sourcing of IT deals:

6. Prepare for People Problems. The outsourcing deal you signed may limit your right to solicit and re-hire provider personnel or make it difficult for the new provider's employees to shadow or conduct other knowledge transfer work with the incumbent's people, says Andrews of Thompson & Knight.

7. Select the Right Silo. "Towers where an incumbent outsource provider has included labor, hardware and software as part of the service offering will be much more complex to transition to another service provider than that same tower being provided under a labor-only model," says Pace Harmon's Martin.

8. Calculate the Cost of Disruption. There will be a price to pay for moving the work to a new provider so figure out what it is before first. "Do your homework," Lepeak says. "Understand the risks, costs and the level and nature of the likely disruption, and weigh that against the benefits of the transition."

9. Master Multisourcing. Most of today's resourcing work involves a partial transfer of outsourced functions resulting in a multi-provider environment, says Andrews. Coordinating multiple providers takes time and effort. Andrews advises that new contracts address some of those challenges including cooperation among providers, customer consent and approval requirements, and common access or usage rights to software or other proprietary materials.

10. Make it Easier on Yourself Next Time. You've consulted the contract, calculated the costs, and made the decision to recomplete. When it comes time to sign on the dotted line with the new provider, apply what you've learned. "The outcome of a re-sourcing often depends on leverage," says Andrews. "Make sure you have some in the new contract."

Source: CIO

Thursday, April 21, 2011

Tips for Successful Re-sourcing of IT Deals (Part I)

Re-sourcing might seem a complicated process at first sight for most IT services customers, although it is not, unless you follow the expert advice provided by the best outsourcing consultants and outsourcing experts that we highlight in today’s post.

Re-sourcing – the process also known as "recompeting" a deal – means switching outsourcing providers or bringing work back in-house, and it’s quite a usual practice in business world, and businesses shouldn’t be afraid to switch providers if they feel unsatisfied with their current services.

A successful transition from one vendor to another requires cooperation between the two, and both sides should consider the following tips in order to succeed at the recompete:

1. Go Back In Time. "Remember why you outsourced in the first place," says Edward J. Hansen, partner in law firm Baker & McKenzie. "If the reasons to outsource are still relevant, then you should consider changing providers rather than abandoning the strategy."

2. Consider The Deal Lifecycle. "Contractually it is often easier – though not easy – to shift work from one provider to another at the end of a contract term rather than in mid-term when various penalties may be incurred," says Stan Lepeak, Director of Research in KPMG's Shared Services and Outsourcing Advisory group.

3. Consult Your Contract. "Your contract could include exclusivity provisions, minimum spend commitments, or rights of first offer or first refusal for the provider that contractually limit or prohibit resourcing," says Steve Martin, partner in outsourcing consultancy Pace Harmon.

4. Question Your Motivations. "I recommend spending the time to determine what is motivating the customer to pursue this path, and whether it may be possible to make the current relationship work," says Hansen of Baker & McKenzie. "It may be possible to reset the relationship, renegotiate the contract and avoid the operational risk of moving."

5. Question Your Outsourcer's Motivations. "If the service is bad, it may be an indication of an unprofitable deal for the supplier and they may be motivated to move away from it," Hansen says. "On the other hand, if you can have a good honest conversation about this, you may be able to renegotiate the deal and leave the services where they currently sit."

To be continued...

Source: CIO

Friday, April 8, 2011

Success Drivers in an Outsourcing Relationship

Managing a long-term outsourcing relationship is no easy task and establishing an outsourcing relationship that is both efficient and mutually beneficial may sometimes seem unattainable. Missed deadlines, fixed expenses, work or finished products that don't meet expectations are just a few of the problems that business owners can imagine when they think of outsourcing IT services to an independent contractor. Is that how many of you think of outsourcing? The answer is “no”, if you just take note of the following tips for how to get an outsourcing relationship on the right track.

In order to minimize problems and get better results from outsourced IT projects, here are four things you should do to make the outsourcing relationship work for you:

Identify which tasks are appropriate to outsource. Make a list of tasks that are routinely performed by you and your employees. Review the list to see which activities might be outsourced: tasks that make good candidates for outsourcing include activities you or your key personnel are doing that are routine and repetitive and taking time away from more important work and tasks that you and your staff don't really have the expertise to do, but aren't needed on a regular basis.

Systematize repetitive tasks. To get good results when a repetitive task is outsourced, you need to be able to provide the contractor with details about how the work should be done. Take the time to write down the steps you take to complete the work you want done, including enough detail about the steps that need to be completed, methods to be used, recordkeeping that needs to be done, etc. so that a contractor can perform the work the way it would be done in your company.

Research needs for projects that are beyond your area of expertise before you outsource the work. You won't be able to choose the right contractor for a job and the contractor won't be able to meet your expectations if your expectations aren't reasonable and clear up front. What do you want done? What's your budget? What results do you expect? How do you want the results achieved? What's the time line? What deliverables will you require? Make sure you have clear answers to these questions before the tasks are outsourced.

Locate and get to know companies and people you might want to use – ahead of time. Check out their websites, check their references, and where appropriate, give them small jobs first. If those are completed satisfactorily, then assign the contractor bigger or more important tasks.

Source: NASDAQ

Friday, March 25, 2011

Gartner Banks on Platform as a Service in 2011

According to the Gartner’s latest statement, 2011 will be the year of Platform as a Service (PaaS). Gartner believes that all leading enterprise software vendors will introduce or strongly expand their PaaS service offerings and cloud-enabled application infrastructure products.

"By the end of 2011, the battle for leadership in PaaS and the key PaaS segments will engulf the software industry," said Yefim Natis, vice president and distinguished analyst at Gartner.

To make it plain, PaaS is a common reference to the layer of cloud technology architecture that contains all application infrastructure services, which are also known as "middleware" in other contexts. PaaS is the middle layer of the software stack "in the cloud". It is the technology that intermediates between the underlying system infrastructure (operating systems, networks, virtualization, storage, etc.) and overlaying application software.

Gartner also predicts that by 2015, most enterprises will have part of their run-the-business software functionally executing in the cloud, using PaaS services or technologies directly or indirectly.

Source: InformationWeek

Wednesday, March 16, 2011

How to Choose the Right Cloud Computing Vendor

It has been noted by multiple advisory and analyst groups, that there's an awful lot of interest in the cloud area right now. It’s not surprising that business see benefits in the cloud services and cloud providers are in great demand. But can all companies quite deliver on the services they're promising? How to choose the right partner in the growing number of cloud providers crowding the market nowadays? You definitely want to do more than type the names of a few providers in a search engine. Selecting the right cloud services provider is a critical step to ensure that they can deliver on the promises offered by cloud computing.

Patrick Grey, president of the Prevoyance Group, and Charles King, principal analyst of Pund-IT, help to sort out the problem and give their tips and expert advice on the best way to seek a cloud computing vendor. Below are a couple of guidelines they suggest:

Use metrics. Set benchmarks to measure good performance. Be realistic, though: 100 percent isn't always achievable, but maybe 99.9 percent is.

Network. The best resources for choosing prospective vendors are other IT decision-makers and other vendors. "You would be well-advised to touch base with vendors you work with closely," says King. "You basically have to get out and work the networks and see what you can find."

Make a test case. A good way to test a prospective vendor is to give them a non-essential part of your business first. And only then you can eventually move more critical pieces over.

Consider data storage and security. Take a look at how a cloud provider's data storage, data security and security infrastructures work. How do these firms protect your data? What kind of security measures are in place?

Use a service-level agreement. For critical, sophisticated or big projects, include a service-level agreement detailing which metrics need to be met and what penalties will ensue if they're not met.

Source: NewsChannel 5

Saturday, March 5, 2011

Cloud On Top of Outsourcing Demand in 2011

According to a recent survey conducted by the global sourcing advisory firm EquaTerra, cloud computing will largely impact the IT services marketplace in 2011. Cloud based services will dominate the market and will attract more and more contracts from growing Small to Medium Business.

Alongside growth and importance of cloud computing, other key findings of the survey include the waning demand for outsourcing in its traditional, legacy form with a focus on generic, horizontal IT and the bulk of mega-deals. IT outsourcing will continue to evolve and diversify in a more fragmented manner. Established outsourcing models are going to be replaced by more flexible ones with the following characteristics:

• Smaller in scale and scope
• Larger efforts and ambitions, pursued more incrementally
• Greater focus on more strategic activities and specific vertical industry services
• Greater focus on functional areas such as legal, research and development, and real estate and facilities management
• Greater standardization of offerings and platforms with a nascent but growing focus on cloud computing delivery models
• More realistic and tighter business cases

The business and IT service market has matured over the past five years and the outsourcing buyers and service providers with inveterate mindsets and operating models will find it challenging and even threatening to survive amid the current market changes.

Source: EquaTerra

Monday, January 24, 2011

Eastern Europe to Dominate the IT / ICT Outsourcing Space

Eastern Europe, already a popular and trusted nearshore location for continental Europe outsourced functions, is sweepingly ramping up as a hotspot for global players luring more and more software outsourcing contracts. Just consider the latest activity in the region: Wipro opened its development center in Budapest (in December 2010) and chemical producer Celenase has recently contracted IBM to run its financial shared services center in Hungary.

So what are the driving forces that make the Eastern European region so attractive? A shift in economic patterns, rise in tertiary occupations, improved FDI and government initiatives (lowered tax rates) to promote trade, and improvement of national fiscals are the underlying factors for increased ICT and are the major drivers for IT services and software development. Eastern Europe also ranks high in terms of work ethics and cultural sensitivity, adding to the region’s attractiveness as a base for outsourced activity.

And of course not to forget about the cost advantage. According to the industry experts, the cost advantage offered by Central and Eastern European firms to nearshore and offshore buyers is comparable with that offered by China.

Summing up, it is now highly likely that Eastern Europe will move out from being an ‘emerging destination’ to a ‘key destination’ for IT outsourcing activity. The region is expected to experience a new surge of demand from Western Europe and at the same time gain a ‘hard to ignore space’ on the world arena in the coming years.

Source: SourcingNotes

Monday, January 17, 2011

Ukraine Reports Highly Profitable Year in IT Exports

Ukraine's Vice Prime Minister Serhiy Tyhypko announced that the country’s exports of computer software reached 1 billion USD in 2010. Ukraine – the world's fifth biggest IT services exporter – doubles its IT services exports every year, making IT the fastest growing export-oriented sector of the country.

"The steel export totals 2.8 billion USD, the export of agricultural products is up at 9.5 billion USD, and chemical products export reached 3.5 billion USD. And the export of software products is worth 1 billion USD. Moreover, the inflow doubles each year," said the Vice Prime Minister of Ukraine.

In terms of IT services and software engineering, Ukraine primarily places emphasis on its deep talent pool. With 14,000 IT specialists graduating from Ukrainian universities each year, the country holds the fourth position in the world in the number of IT specialists, following the USA, India, and Russia. On top of that, the experts recognize both quantitative and qualitative potential of the Ukrainian specialists.

By the way, there has recently appeared a monument to IT specialists in the Eastern Ukrainian city of Kharkiv. The monument is placed outside of the Kharkiv National Radioelectronics University and depicts a young IT student holding an opened laptop. He is deep in his thoughts, perhaps thinking of creating a software program which could eclipse Microsoft.

Source: PR Newswire

Thursday, January 6, 2011

European Trends in ITO for 2011 (Part II)

As promised in the previous post, here comes the continuation on the development tendencies of the European ITO market in 2011. Judging from the perspective of ITO services providers, the following trends and changes are anticipated:

It is expected that an increased demand to adopt outsourced IT services will come from the SME segment. This will force service providers to anticipate smaller and, thus, less profitable deals. To ensure more significant profits in the long term, IT providers will have to improve their adding-value service offering, cloud capabilities and modify current engagement models to help SMEs grow their business and, as a result, to benefit from their clients' growth.

Secondly, innovative outsourcing engagement models are anticipated to hit the mainstream. Outsourcing entire product or application development processes, the companies will demand from their potential partners transparent cost structures, no hidden agenda, options to easily scale up or down in compliance with the current business situation, etc., which makes service providers diversify/innovate their engagement offerings.

And the third trend reveals itself in the breakdown of the client-silo approach. As businesses aim to learn more best practices by sharing knowledge with their peers across different industries, IT providers will be challenged to transform their client-silo mindsets and encourage collaboration between clients from various industry domains.

All in all, 2011 promises a prosperous but at the same time challenging year for European ITO with focus on agility, processes optimization, transparency of transactions and payments, innovation, and cloud. But we’re looking with optimism into the new 2011!

Source: EzineMark

Tuesday, January 4, 2011

European Trends in ITO for 2011 (Part I)

Well, another year is here with its new perspectives, new hopes, new aspirations, as well as new plans and strategies. At the very start of the year we bring to your notice IT Sourcing Europe’s outlook on the European ITO market and future development trends and relations between Western European ITO services buyers and Eastern European ITO services providers.

Judging from the perspective of ITO services buyers, the following trends and changes are anticipated in 2011:

One of the most vivid tendencies – which came from 2010 with over 9 billion Euro in contract value and is anticipated to further increase in 2011 – is the increased demand for outsourced IT services from the public sector. The demand for cost-effective outsourcing opportunities in this sector is primarily explained due to recent turmoil in such countries as Ireland and Greece as well as economic uncertainties in other EU member states.

Secondly, there is traced a shift from mere cost saving to access to qualified and lower-cost IT resources. Already in the previous year Western Europe faced a significant shortage in skills and resources in the branch of software development; Eastern Europe, on the contrary, showed a significant increase in IT workforce led by Romania with a 12.33% growth in the number of IT specialists and followed by Ukraine with a 9.51% growth.

Closely connected with the above comes the third trend: nearshoring will hit the mainstream. Of almost 2,000 non-outsourcing companies polled in the survey, more than 22% plan to transfer their IT/software development nearshore versus only 11% of those who plan to outsource offshore.

And last but not least, service integration will help achieve innovation. In 2011, more Western European IT leaders are expected to realize the importance of integrating the outsourced project management, orchestration and delivery, thus gaining full control of their sourced projects.

In the second part of the post we’ll dwell on the trends and changes which are anticipated in 2011 judging from the perspective of ITO services providers.

Source: EzineMark