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