Russia & Eastern Europe: 2011 IT Outsourcing News

Overseas Businesses Stake on Offshoring

2012-01-22T23:55:00.000-08:00

65% of businesses in the US, a way better half, send tech jobs offshore, according to an annual survey from Society of Information Management (SIM). The survey encompassed 275 US companies interviewing CIOs and senior IT leaders.

Even despite the sagging economy, companies aren't cutting IT budgets in 2012. The reason for this is that companies see IT as a valuable investment and businesses are trying to leverage IT to reduce costs instead of cutting IT to save money. In this respect, IT cost reduction becomes one of the least concerns of top management; the major – business alignment. The study revealed other IT priorities in business agility, business process management, strategic planning, reliability and efficiency, enterprise architecture, security and revenue-generating IT innovations.

The most in-demand services in offshore outsourcing are product and application development, application testing, and maintenance and support. Russia and Eastern Europe are among the most preferred emerging destinations, while India remains an established outsourcing spot for most US companies, followed by China and Latin America.

Source: ComputerWorld

Outsourcing of IT Services in Capital Markets

2012-01-18T23:31:00.000-08:00

Global financial services companies are aligning their IT strategies and priorities along with the developing market and business conditions.

According to a recent study from Everest Group on the trends and future outlook of IT outsourcing in Capital Markets, the volume of large-sized, active capital markets transactions grew four-fold from 2008 to 2010. A large part of such large capital markets deals are structured around application development, ongoing enhancements, and maintenance.

Everest Group stated the key imperatives for capital markets firms today as:

• Alleviating risk and complexity caused by uncertain global economic environment and wide scale regulatory reform;

• Managing trade volatility to streamline front-office operations and modernizing the clearing and settlement function in mid- and back-office;

• Building “region-specific” expertise to drive the global growth agenda, given that capital markets’ operations across geographies are facing disparate challenges.

In terms of offshore software development, Ukraine is positioned as an unrivaled best choice with regional market-specific expertise. Financial giant Barclays Capital, for example, opened its technology center in Kyiv in 2010 and sees Ukraine as a key strategic destination within its technology growth plans.

Source: Global Services

Hunting for New Geographies: Tips for Successful Outsourcing

2012-01-12T23:58:00.000-08:00

In the search of better conditions and opportunities, it is natural for enterprises to look for new unexplored destinations for business. In the previous decades, the choice was mainly driven by cost factors, where India and China appeared as evident leaders in the global outsourcing space. Times, as well as value considerations, change and cost criteria cede to a more important asset such as untapped potential, for which emerging areas are increasingly being sought after.

Cultural affinity, mature infrastructure, and language capabilities are just among the few factors driving the hunt for new destinations in outsourcing. Eastern Europe and Middle East are among the regions that are nowadays experiencing high nearshore demand from clients in the United States and Western European.

When moving to new areas, it’s essential to consider multiple factors to succeed. Below we suggest a couple of tips for successful outsourcing to emerging destinations:

• Local knowledge and understanding of specific contexts of each region is essential.

• Risk diversification is important. There needs to be a right balance between offshore, onshore, and nearshore activities.

• In the current scenario, economic stability in different regions is an important factor to be considered.

• And finally, scalability is another factor that becomes important in the long run. Estimate the demographic and IT potential of each region carefully in terms of scalability and growth.

Source: Global Services

Gartner Forecasts Enterprise IT Spending to Reach $2.7 Trillion in 2012

2012-01-12T00:00:00.000-08:00

Despite the global economic uncertainty, Gartner analysts anticipate that the worldwide enterprise IT spending will experience a 3.9% increase next year reaching the total of $2.7 trillion. Enterprises will continue to invest heavily in their IT infrastructure seeing it as the major drive of business growth.

Peter Sondergaard, Senior Vice President at Gartner and Global Head of Research, underlines the importance of IT: “The days when IT was the passive observer of the world are over. Global politics and the global economy are being shaped by IT. […] For example, this year 350 companies will each invest more than $1 billion in IT. They are doing this because IT impacts their business performance.”

An increase in the IT services demand, consequently, means more projects for IT vendors, where especially outsourcing services are increasingly sought after. Gartner particularly notes, that emerging markets will continue to get closer attention in the coming years, in particular rising economies. According to Gartner’s estimations, the emerging economies will account for $1.013 trillion in 2012 of the global IT spending of nearly $3.7 trillion. Considerably in demand are ASM & infrastructure services, software testing, and offshore software development. Russia, Ukraine, Poland, and Belarus are currently most promising outsourcing spots luring more and more international customers from Western Europe and the US.

Source: Global Services

Untapped Opportunities in the Heart of Europe

2012-01-11T01:48:00.000-08:00

Despite being one of Europe's most controversial countries, Belarus, favorably located between Western Europe and Russia, is among one of the IT leaders in Central and Eastern Europe providing unmatched ITO opportunities and having one of the biggest potential among CEE counterparts. IT outsourcing is one of the fastest-growing branches in the country and is one of the most robust segments in the country’s economy. Just consider one fact, for the first half of 2011 Belarusian IT companies have reported a 55% increase in their software and IT services export.

Having gained independence about twenty years ago, Belarus has rapidly grown and developed in the last years with all the values of the Western culture. And although it does retain some traits of the Eastern mind, the country is much West-oriented. Keen to cut costs, Western companies are increasingly seeking new destinations for outsourcing, and Belarus is a great opportunity nearshore which has a lot to offer in terms of tech skills.

Belarusian education is one of the strongest supporting factors. Every year, Belarusian universities graduate about 3,900 specialists with ICT and related technical skills. Because of the high quality of technical education, Belarus has the reputation of a country with a high scientific potential and an essential pool of IT talent. Belarusian software engineers undergo training in the training centers of IBM, Lotus, Sun, Novell, Microsoft, and other world IT leaders. In fact, when it comes to dealing with complex software development tasks, the ones who outshine all others are the developers from Belarus. Product development, software testing, and ASM & infrastructure services are among the strongest sides of the Belarusian IT sector.

Krakow: The Next Big Thing in Outsourcing

2011-12-27T04:51:00.000-08:00

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

Ukraine as an Outsourcing Hub

2011-12-21T23:39:00.000-08:00

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.

Technical Talent as the Biggest Stake in Outsourcing

2011-12-20T04:25:00.000-08:00

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.

Trends in Outsourcing – Eastern Europe Keeps Ground

2011-12-19T06:17:00.000-08:00

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

How to Leverage SAP Advantage for Your Development Needs

2011-12-16T01:52:00.000-08:00

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

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

2011-12-13T00:43:00.000-08:00

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

SAP Solutions in Central and Eastern Europe Pick Up Steam

2011-12-12T02:05:00.000-08:00

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

Redefining the Role of Outsourcing in Travel

2011-12-09T03:44:00.000-08:00

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.

Eastern Europe: a Land of Promising Opportunities

2011-12-05T06:47:00.000-08:00

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

The Glory Days of Indian Outsourcing Succumb to NearShore Opportunities

2011-12-02T05:40:00.000-08:00

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

Gartner Updates Annual IT Spending Forecasts

2011-07-07T07:13:00.000-07:00

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

Cloud Market to Reach $121 Billion in 2015

2011-06-23T06:10:00.000-07:00

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

IT Outsourcing in Contemporary Russia

2011-06-17T04:45:00.000-07:00

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

Excellent NearShoring Choice – Ukraine

2011-06-13T04:48:00.000-07:00

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

Collaborative Sourcing As a New Transformational Approach

2011-06-10T05:16:00.000-07:00

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

Why Russia and Ukraine are Hot Sports for Financial Technology Outsourcing

2011-05-18T07:07:00.000-07:00

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

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

2011-04-25T04:48:00.000-07:00

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

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

2011-04-21T04:33:00.000-07:00

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

Success Drivers in an Outsourcing Relationship

2011-04-08T04:23:00.000-07:00

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

Gartner Banks on Platform as a Service in 2011

2011-03-25T05:46:00.000-07:00

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

How to Choose the Right Cloud Computing Vendor

2011-03-16T05:36:00.000-07:00

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

Cloud On Top of Outsourcing Demand in 2011

2011-03-05T03:22:00.000-08:00

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

Eastern Europe to Dominate the IT / ICT Outsourcing Space

2011-01-24T07:34:00.000-08:00

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

Ukraine Reports Highly Profitable Year in IT Exports

2011-01-17T07:13:00.000-08:00

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

European Trends in ITO for 2011 (Part II)

2011-01-06T07:14:00.000-08:00

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

European Trends in ITO for 2011 (Part I)

2011-01-04T01:31:00.000-08:00

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

Gartner Reveals Technology Predictions for 2011

2010-12-17T03:26:00.000-08:00

End of the year is as ever favorite time of most analyst firms for rolling out predictions, forecasts and all sorts of watch lists for the coming year. Especially of interest are those from most influential analyst powerhouses, like Gartner for example. Last week Gartner – the world's leading information technology research and advisory company –issued its “Top Technology Predictions” for IT organizations and users for 2011 and beyond. Let’s have a closer look at some of them which we find are worth sharing:

• Twenty Percent of Non-IT Global 500 Companies to Deliver through the Cloud. More and more – 20 percent – of non-IT companies in the Global 500 will continue to deliver products and services through the cloud, becoming de facto cloud computing companies by 2015. That means the role of IT decision making gets broader, and non-IT companies find themselves competing directly with IT service providers.

• IT Automation Results in Tangible Costs Savings through Man-hour Reductions. Self-service and automated provisioning associated with cloud delivery means productivity levels for service providers will increase—Gartner estimates a 25 percent reduction in IT labor hours by 2015.

• Consumerization of IT Transitions to “Postconsumerization”. Gartner predicts “postconsumerization” as one of the major trends for the upcoming years where instead of IT focusing on devices, apps and infrastructure, IT will shift to address info and peer-to-peer interaction. It is expected that ninety percent of companies will support corporate apps on personal devices like mobile, laptops and tablets, by 2014.

• Tablets Get Enterprise Support. iPad is just the first in a long future line of media tablets focused on “communications and consumption” of data instead of “creation” . As a result, 80 percent of enterprises will offer support for network connectivity, email, calendaring, and help desks by 2013 on tablets, says Gartner.

• National Infrastructure Hacked and Disrupted. By 2015, Gartner predicts at least one of the G20 nations will be the victim of dramatic online sabotage that will disrupt and damage critical infrastructure components. Whether it’s a stock exchange, physical nuclear plants or mobile-phone message routers, the analyst firm says attacks with lasting damage are only a matter of time.

Source: Channel Insider

Western Europe’s Outsourcing Trends

2010-12-01T04:50:00.000-08:00

Western Europe, the second largest outsourcing market after the US, is characterized by a pretty diverse behavior in terms of software development outsourcing habits. The latest trends and key similarities and differences in ITO engagement were recently highlighted in a report by an independent IT outsourcing (ITO) research and advisory company IT Sourcing Europe. The report is based on a comparison analysis of corporate outsourcing behaviors in the United Kingdom, Denmark, Germany, Switzerland, Netherlands, and Austria.

Below are some thought-provoking findings for nearshore and offshore software vendors:

1. Regarding the most popular outsourcing destinations in 2010, the majority of the UK and Dutch companies (23% and 29% respectively) outsource their software/web development offshore (i.e. India, China, Philippines, Pakistan, etc.), while most of Danish (34%), German (37%), Swiss (41%), and Austrian (32%) companies prefer nearshoring when it comes to outsourcing software development (Eastern Europe and the Baltic states are among the most popular destinations).

2. Regarding the future outsourcing destinations, the equal number of the UK outsourcers (28% and 28% respectively) will place their software development function nearshore and offshore; the majority of Dutch companies will be sourcing nearshore (27%), while Danish, German, Swiss, and Austrian companies will continue outsourcing nearshore (25%, 31%, 32%, and 30% respectively).

3. Regarding the actual savings from the outsourced development, most of the UK (36%) and Danish (27%) companies save 40% to 59% of their operating costs, while majority of Swiss (35%), German (38%), Dutch (28%), and Austrian (31%) companies manage to save 10% to 24% from their outsourced development.

More interesting findings will be available in the European ITO Intelligence Report 2010 to be released in December 2010.

Source: IT Sourcing Europe

Outsourcing Market is Ramping Up Challenging Established Locations

2010-11-19T07:10:00.000-08:00

A newly released study by Duke University's Offshoring Research Network and PricewaterhouseCoopers has revealed that the long established outsourcing locations India and North America are steadily surrendering in the space of outsourced software development. Eastern Europe, Latin America, and Asia, on the contrary, are picking up steam and emerge as strong global rivals. The challenging service areas are named contact centers, business process outsourcing, and information technology outsourcing. The results are based on a global survey conducted among 514 outsourcing service providers in 50 countries.

The survey’s findings clearly indicate the growing potential of the outsourcing market with offshoring continues constituting its biggest part – the market continues to expand globally driving competition and more cost-effective services. "Growing competition has transformed the outsourcing industry into a global race for market share," PricewaterhouseCoopers’ Managing Director Charles Aird noted in his statement.

Other facts of interest according to the survey include:

• A large number of service providers expect to begin new software development and IT-service contracts over the next several years. Overall, 62 percent of service providers said they plan to expand the scale of their existing offerings.

• The survey also found that the economic crisis of 2009 reemphasized the importance of cost savings and efficiency improvement as the top strategic reasons for outsourcing, followed by access to qualified personnel.

Source: Outsourcing-Russia.com

ITO Market Keeps Up Growth in the Third Quarter: Everest

2010-11-12T07:39:00.000-08:00

Everest Group, a global consulting and research firm, has recently issued its Q3 Report on the global outsourcing market. The findings reflect certain improvement of the IT services (ITO) market compared to the previous quarter, while business process outsourcing (BPO) activity marginally decreased. The report mentions, that ITO activity was largely led by five "mega deals", each having contract values over $1 billion.

Other key highlights of the report include:

• North America continued to account for about one-third of total transactions; North America and the United Kingdom contributed toward about one-half of all deals. Notable activity was reported from select geographies, including Spain, Germany and India.

• The banking, financial services and insurance (BFSI) and manufacturing, distribution, retail (MDR) verticals continued to dominate transaction signings, with some high-value contracts also reported in the public sector.

• In addition to the five ITO mega deals, 60 large deals with contract values exceeding $50 million also were recorded during the quarter.

• Offshore activity saw 34 delivery centers established in the second quarter, the majority in Asia followed by Eastern Europe and Latin America.

Source: Global Services

Introducing Multimodal Agenda for Software Testing

2010-10-18T04:11:00.000-07:00

In the latest issues of Software Magazine, authors Kim Pries and Jon Quigley have presented a worthwhile approach to fit most software testing needs. The so-called four-phase approach concentrates on the following most used testing models: compliance, combinatorial, stochastic or exploratory, and extreme value testing. Below are the highlights of the article with most essential standpoints.

• To have compliance testing there should be requirements (product specifications) for which compliance is essential. That seems easy. But the challenging point is to define the product environment. This might not be as easy and in many cases also time-consuming and expensive. But on the other side of the story, underestimation of environmental factors, especially in embedded software development, may lead to big failures. If the product meets the customer specification but fails in the field, the customer organization will bear the burden of resulting penalty and suffer negative effects.

• Combinatorial testing. There is usually a combination of factors, environmental or external, present in the field which makes thorough adequate testing difficult. In some cases the most critical variable is time. How much time is necessary for thorough testing? For this, we need to evaluate substantial experimental or field information. Combinatorial testing consists in finding interactions of stimuli that can have impact on the product. The goal is to define these multiple stimuli that the product will most likely experience.

• Stochastic or exploratory testing occurs when an experienced test engineer uses his or her intuition to conduct unplanned experiments with the product. The value in this testing approach lies in the fact, that it adds a touch of reality by simulating the behavior of real users.

• Severe Environment testing. Extreme scenarios are those test cases that push the product to its limits. Relying on the commonly heard “this will never happen in the field” may lead to serious concerns, because events of the kind actually do usually occur in the field.

As a matter of fact, this is how a four-fold mechanism for providing substantial test coverage works for software development. A fifth optional method suggested by the authors is to attack own software as if you were evil “hackers” determined to break own code. The main point of the approach is to “attack” the product software in any possible way to see if and where it can be vulnerable. The only strong path to strong software is believed to be in looking not only for requirements failures but also for definable weaknesses.

Source: Softwaremag.com

The Nearshoring Choice of European Businesses

2010-09-23T08:06:00.000-07:00

During one of the latest Global Services’ webinars, Avinash Vashistha, CEO and Chairman Tholons, noted: "Western Europe has done a significant amount of nearshoring to Eastern European countries which have become a part of European Union.”

But what makes EE/CEE locations so attractive for Western clients? Why, unlike their American counterparts, European businesses prefer to keep their IT initiatives close to home? Why such popular offshore destinations like India and China are losing ground?

According to Tholons and Global Services' joint study, the first reason for Europe’s neashoring success lies in the conservative nature of Europeans who are comfortable to keep work close to home and do not have a settled tradition of sending work overseas. And traditions mean much in Europe.

The second reason is the wide choice of Eastern European countries which are traditionally strong in IT with a reputable and solid background in computer science. For example, the study distinguished the following EE countries strong in software outsourcing: Poland provides excellent BPO and IT services, Hungary offers cost effectiveness for clients, Russia is good at technology development and R&D work, Ukraine offers capabilities in BPO, and Romania in business analytics.

And last but not least, the study mentions financial attractiveness, cultural compatibility, and good educational structure of EE countries.

Attractive combination altogether, isn’t it? No doubt, EE/CEE shall see increased investments in the near future and increased customer interest in their IT offering.

Source: Global Services

Europe Embarks On the Outsourcing Spree

2010-09-09T07:55:00.000-07:00

According tо the recent report by Gartner, world’s leading information technology research and advisory company, IT outsourcing is strongly gaining momentum in Western Europe, the second largest market after the US. The survey results show, that more than half, exactly 53%, of organizations in Europe plan to increase outsourcing initiatives in 2010, and 40% anticipate to surge spending on external IT services. The online survey was conducted among 206 organizations in Europe during in the first quarter of 2010.

At the same time, the analyst firm does not see it all in bright colors and warns service providers of potential constraints. With IT budgets still tight, European organizations expect their vendors to deliver tangible cost reductions. The market opportunities are large, but the customer expectations are also high. European organizations are looking for outsourcers to provide more than “my mess for less”, says the report.

Outsourcing upside creates excellent opportunities for nearshore service providers. Nearshoring has a row of advantages, such as time and cultural proximity, cutting travel costs, etc. In such situation, established Central and Eastern European vendors, which bring about the whole bunch of nearshoring advantages, come as a natural choice for many Western European clients.

Source: V3.co.uk

Nordic ITO buyers’ satisfaction fuels market growth

2010-08-13T07:14:00.000-07:00

Apart from Central/Eastern Europe which is one of the world’s most tempting ITO spots, other European regions equally show positive tendencies and expand their ITO market. To get an insight into the current state of affairs of the Nordics outsourcing market let’s turn to EquaTerra’s recently released 2010 Nordics Service Provider Performance and Satisfaction study that covers the Information Technology Outsourcing (ITO) and BPO markets, usage and service provider performance.

The sweep of the survey is impressive: the 2010 Nordic study investigated over 440 outsourcing contracts held by over 220 of the top IT spending organizations in the Nordic region. The total annual value of the contracts included in this study is over €3 billion, accounting for around two-thirds of the total Nordic outsourcing market in terms of annual contract value. All commercial sectors are represented in the study.

The 2010 results reflect positive tendencies: the ITO market is growing and the buyers are considerably satisfied with the delivered services. In more detail, you can see the exact percentage ratios summarized below:

• 84% of all Nordic ITO buyers polled indicated they will continue to outsource at the same or higher levels going forward.

• 72% of Nordic ITO buyers, up 8% compared to last year, indicated that outsourcing contributes significantly or moderately positively to meeting the primary drivers and benefits sought from their efforts.

• 55% of respondents are very satisfied or satisfied with their ITO efforts, and 29 % are somewhat satisfied. Only 6% are very or somewhat dissatisfied.

• 84% of all Nordic ITO buyers are satisfied with their outsourcing service providers in terms of general satisfaction, and 91 % of buyers would recommend their service provider(s) to another outsourcing buyer organization.

The use of offshore outsourcing in the Nordics has significantly increased over the past year. 52 percent of Nordic ITO buyers are currently making use of offshore outsourcing, up 11 percent compared to last year. This complies with the global tendencies of greater use of nearshore resources with similar language skills, cultural proximity, and closer time zones.

Source: EquaTerra

Europe Tops List of Safest Outsourcing Spots

2010-08-06T06:39:00.000-07:00

In the context of global sourcing and new emerging locations, security and safety concerns are becoming the top issue for companies considering outsourcing their IT projects to cost efficient locations offshore. In this respect, the annual research conducted by the Black Book of Outsourcing with the rankings of the most dangerous / safest outsourcing spots around the globe attracts great attention among companies as a reference point for long-term business strategies.

The latest research for 2010 interviewed 3,100 corporate development leaders, including more than 400 outsourcing customers, to indicate their company's inclination to consider specific offshore locations for outsourcing (including IT outsourcing and BPO). The survey asked respondents to rank those cities on various perceived threats and weaknesses, including geopolitical risk, terrorist threats, climate concerns, legal maturity, environmental waste and pollution, IT and telecom infrastructure security, and crime rates.

According to the 2010 results, Central/Eastern Europe (CEE) tops the list of the safest offshore locations, while Pakistan, Colombia, and Mexico top The Black Book of Outsourcing's 2010 list of the most dangerous places for offshoring.

The results are particularly important for companies engaged in high-risk business, like finance, where security, stability, IP and data protection come first and often overweigh cost factors. According to the published survey results, CEE proves an ideal secure and cost-efficient spot for outsourcing IT projects. This has already been marked by some leading companies who engaged with regional providers. One of the latest examples is the decision of the investment giant Barclays Capital to set up its IT Center in Kyiv and select EPAM Systems, the leading software engineering services provider in Central/Eastern Europe, as its technology partner for offshore software development. Ukraine’s capital Kyiv is among the Top Ten safest cities for offshore outsourcing.

"Even the perception of risk factors such as high crime, corruption or terrorist threat can paralyze a region's offshore business momentum," says Douglas Brown, Research Director of Datamonitor's Black Book. "That required sense of security can be destroyed, even in the most vibrant and progressive of communities, entirely on what is perceived by the corporate decision maker."

Source: CIO

EquaTerra Takes the Pulse of European Outsourcing Market

2010-08-02T07:02:00.000-07:00

EquaTerra, a global sourcing advisory firm with expertise in information technology (IT), finance, human resources and other business processes, has conducted research for Computer Weekly readers that analyses the market and trends for IT outsourcing in Western Europe. The report is taken from EquaTerra's global business and information technology pulse survey, a quarterly survey of leading outsourcing service providers and EquaTerra’s own client-facing advisors.

Some of the findings of the report are:

Demand growth for BPO and ITO slips slightly in 2Q10. Inherent outsourcing demand remains positive and is growing overall but still many buyers remain cautious in their efforts, especially what concerns upfront investments and complex deal arrangements.

Significant challenges for the providers are improving existing contract profitability and expanding scope with existing clients. Demand for non-outsourcing services like consulting and packaged software services is still weak. Providers cite long-term opportunities to make money from buyers’ cloud computing initiatives but it is unclear which providers will benefit the most and how much these new revenue streams will offset declining traditional systems integration work and potentially the loss of some traditional outsourcing business.

Buyers continue their efforts to reduce operating costs and overhaul service delivery models, with internal process improvement and alternative delivery models like shared services gaining in importance as change agents. Interest in cloud-based services such as SaaS is gaining traction.

The use of multi-sourcing or multiple outsourcing service providers in adjacent and complementary functional areas continues to grow. The growth of cloud computing opportunities to complement, extend, and in some cases supplant traditional outsourcing will further drive more multi-sourcing, at least in the short to medium term, as new service providers come to market.

Source: ComputerWeekly

Top 10 Mobile Technologies to Watch in 2010/11

2010-07-22T04:31:00.000-07:00

Gartner has identified 10 mobile technologies that will evolve significantly through 2011, and as Nick Jones, vice president and distinguished analyst at Gartner, says these “10 mobile technologies should be on every organization's radar screen".

So, here we go:

• Bluetooth (3 and 4). Two new Bluetooth versions will emerge by 2011: Bluetooth 3 will introduce 802.11 as a bearer for faster data transmission, and Bluetooth 4 will introduce a new low-energy (LE) mode that will enable communication with external peripherals and sensors.

• The Mobile Web. More smartphones will appear in the world market and that will encourage greater numbers of people to access conventional websites on mobile devices. So, mobile applications will eventually be as important as web pages are today.

• Mobile Widgets. Widgets provide a convenient way to deliver simple, connected applications, especially those involving real-time data updates (such as weather forecasts, e-mail notifications, marketing, blogs and information feeds). They can also be a good first step to assess the demand for an application on a specific platform before undertaking expensive native development.

• Platform-Independent Mobile AD Tools. Even though platform-independent application development (AD) tools cannot deliver a "write once, run anywhere" equivalent to native code, they can significantly reduce the cost of delivering and supporting multiplatform applications that provide a more sophisticated experience than the mobile Web and operate outside signal coverage.

• App stores. They will be the primary distribution channel for mobile applications and a commercial channel to sell applications and content (especially in international markets), and they will provide new options for mobile application sourcing.

• Enhanced Location Awareness. By the end of 2011, over 75 percent of devices shipped in mature markets will include a GPS. GPS will be the primary, but not the only, means of establishing handset location. Wi-Fi and cell ID systems will remain important in situations where GPS is unavailable or unreliable.

• Cellular Broadband. Continuous improvements in wireless broadband performance in 2010 and 2011 will increase the range of applications that no longer require fixed networking, and make cellular broadband a more effective fallback when fixed connections fail. Embedded cellular networking will become a standard feature of many corporate laptops, and will enable new types of network-connected devices and business models, such as e-books and media players.

• Touchscreens. Emerging as the dominant user interface for large-screen handsets? Touchscreens will be included in over 60 percent of mobile devices shipped in Western Europe and North America in 2011. Organizations developing native handset applications may need to exploit single and multitouch interfaces and haptics to give their applications a compelling and competitive user experience.

• M2M. Many network service providers increased their commitment to machine to machine (M2M) in 2009, so a good range of both national and multinational M2M service options will be available in mature markets during 2010 and 2011.

• Device-Independent Security. This isn't strictly a single technology, but refers to a collection of security technologies, application technologies and sourcing options that enable the provisioning of applications that are secure, but less tightly tied to specific devices and platforms, and that, in many cases, do not require security tools to be installed on the client.

Our 2 cents: mobile applications are becoming as critical as corporate websites for a number of reasons. They provide unmatched user experience to the increasing community of owners of powerful smartphones and other mobile devices. Marketers will keep leveraging the proximity, both physical and emotional, of mobile devices, first and foremost smartphones, to place their products closer to buyers. Predictions about which platform (iPhone, Android, Blackberry, Windows Mobile, or something new we haven’t yet heard of) will take the lead in the coming two years are more difficult to make, but it’s evident that mobile application development market has a very bright future ahead.

Source: Gartner

2010 is the Year of Transition, Gartner Says

2010-07-16T06:02:00.000-07:00

On the threshold of the publication of the 2010 edition of Gartner’s annual CIO Survey, where 1600 of CIOs were asked about their plans and priorities for the year, Mark McDonald, GVP of Gartner Executive Programs, shared some of its findings.

According to the survey, 2010 will be a time of transition from recession to recovery economically, strategically from a focus on efficiency to productivity, and technically speaking from heavyweight to lightweight technologies. But all the while IT budgets will remain tight. Only 6% of the polled CIOs see actual real growth coming in 2010.

Leading CIOs are inventing new rules for the new economy with the focus on productivity, collaboration, and innovation. Strategically CIOs are reshaping their focus from cost efficiency to productivity. This shift is critical for capturing customers and market shares. Additionally, business leaders are reconnecting IT with business performance.

Interesting is the 3-year forecast: by 2013 CIOs see technology as transitioning their role from technology service provider to a source of competitive advantage. This trend is also observed by Zinnov in the outsourced product development space we discussed earlier.

Technology choices are transforming as well. CIOs predict a shift to lightweight technologies that can be implemented quickly without significant expense. For instance, virtualization is the top technology, followed by cloud computing and social tools. Virtualization investment expenses are expected to accelerate in 2010 as Gartner estimates that until now only about 1 in 5 services has been virtualized.

Based on the results of the survey, Gartner recommends CIOs to concentrate on operational results and relationships as well as to focus more on raising productivity than on cutting costs as raising productivity increases opportunity to create value while cutting costs doesn’t drive growth.

2010 should be a year of the transition from IT being a resource based, back office function to a result-based source of innovation and advantage.

Source: Gartner

R&D Partnerships Should Become More Strategic

2010-07-12T00:53:00.000-07:00

A recent study conducted by Zinnov on Software R&D globalization revealed that only 5% of this R&D spend is currently being spent on outsourced partnerships, which means about 95% of the R&D is made by companies in-house. This presents a tremendous growth opportunity for companies providing Outsourced Product Development services.

We attended the webinar on 'Globalization Opportunities in Software Development for Enterprises and ISVs' where Zinnov experts shared further research results.

Vamsee Tirukkala, Co-Founder & Managing Principal, Zinnov, commented on the trend that companies leverage 3rd party global centers mainly for cost savings and access to relevant talent. 83% of the audience confirmed the increasing importance of OPD by answering affirmatively to one of the audience poll’s questions (“Are companies increasingly looking at OPD service providers for global RnD and product development?”).

With a freeze on spending in the face of recession and plans to optimize on investments made over the past 12 months, companies need to rapidly evolve and transform their emerging location centers to increase their innovation capabilities.
Mr. Tirukkala also advised software producers to rapidly their OPD partnerships to the next level with more engineering and product leadership and strategic responsibility. Another audience poll showed that customers consider China and Eastern Europe to be the next most attractive locations for R&D investment, following India that leads in resource volumes, while Eastern Europe is a hot spot of software engineering talent.

Globalization opportunities for enterprises and ISVs seem bright, according to Zinnov, with several small and medium sized companies beginning to work directly with 3rd party providers. “A huge trend we are seeing in the industry in the last 18 months is what we call as the 'go to market' strategy. It’s what vendor partners can bring to the table. If you are a partner in a well-known reputed company, they have the capability to take your product to multiple markets," commented Mr. Tirukkala.

The new pricing models (outcome based pricing, revenue share pricing and risk reward pricing) offered by vendors to clients are adding to the attractiveness of partnerships, he said.

Source: Global Services

In-House or Outsourced IT Infrastructure?

2010-07-02T04:07:00.000-07:00

According to a new research, commissioned by Savvis Inc., a provider of cloud infrastructure and hosted IT solutions for enterprises, the number of companies that outsource their IT infrastructure is expected to increase drastically from 17 percent today to 64 percent in 2020. This independent survey was conducted by Vanson Bourne, a research-based technology marketing consultancy.

The research firm surveyed more than 600 IT and business decision makers from mid to large enterprises and public sector organizations based in the United States, United Kingdom and Singapore.

Sixty-one percent of respondents believe managing IT in-house provides no competitive advantage and has to stop.

"With the rise in acceptance of outsourcing within the IT industry, and the related economies of scale that accompany the managed services model, businesses are finding it difficult to justify owning their own IT infrastructures," said Bryan Doerr, chief technology officer at Savvis, Inc.

It was also revealed that the UK will see the biggest shift from in-house IT infrastructure to outsourcing, falling from 90 percent today to 23 percent in 2020, the USA from 82 percent to 49 percent and Singapore from 62 percent to 38 percent.

In looking at 2010, organizations cited cost savings (58 percent) and growing revenue (54 percent) as their top strategic priorities. The biggest issue organizations face concerns doing more with less budget (54 percent).

Source: Savvis, Inc.

Banks Find Tech Talent in Eastern Europe

2010-06-30T07:24:00.000-07:00

Barclays Capital has unveiled their plans to recruit 500 IT professionals for a new tech centre in the Ukraine.

BarCap is teaming up with EPAM Systems, the largest and most experienced software engineering services provider in Eastern Europe, which will build and operate the new tech centre in Kyiv. It already employs 50 engineers, but by the end of 2012 that figure will rise to 500. The jobs being created in Kyiv are fairly high-end development roles.

Obviously, it's not a new phenomenon for banks to look to Eastern Europe for IT functions. BarCap itself already has a technology center in Prague, as has Commerzbank captured Czech’s advantage in outsourced software development, Poland is a preferred destination of Citigroup and UBS, where both run their service centers. Deutsche Börse also shifted some 270 tech roles from Frankfurt and Luxembourg to Prague in March.

BarCap has cited strong local technical talent and analytical skills available as the primary motivation for the move.

“Obviously, as it's still a developing country, salaries are likely to be substantially less in the Ukraine, but this is not the only issue," says Rajeena Brar, consultant at IT think-tank Pierre Audoin Consultants. "It allows them to make better use of a global delivery model and there's also a huge pool of innovative IT talent in Eastern Europe that banks are keen to gain access to."

Source: efinancialcareers.co.uk

B2BITS launches a replacement program for FIX, FIXML, and FAST enabled software

2010-06-24T04:40:00.001-07:00

B2BITS, EPAM Systems’ Capital Markets Competency Center providing technology for FIX connectivity, announces the launch of a program to support the large base of commercial, in-house developed, and open source FIX solution users who are seeking to improve their operational capacity and lower costs by upgrading their existing Java, .NET and C++ based connectivity tools to modern solutions.

The technology driving FIX trading is rapidly evolving together with the markets demand for efficiency as well as the FIX protocol. The last five years in the market have been characterized by a dramatic increase in acceptance of FIX protocol by exchanges worldwide. This evolution also applies to the increased adoption of FAST for distributing market data. More often market participants, especially the early adopters of the FIX protocol, realize the need to upgrade their FIX connectivity solutions through re-development or acquisition. The major factors that drive the decisions can be:

Limited functionality of legacy FIX based systems compared to the new, more rich solutions available on the market
Performance related factors such as latency and throughput to support high frequency trading
New hardware capabilities utilized by modern FIX engines to improve performance and save costs
Need for interacting with new middleware to expand compatibility
Need for using the latest versions of the protocol to meet counterparty requirements
Lower cost of acquisition and total cost of ownership of new products available on the market
Licensing models making system expansion cost prohibitive
Increased number of connections under management and inadequate operational tools
The new FIX engines come bundled with a full set of tools

Concurrently the following aspects prevent organizations from switching to newer software:

Tight integration of the old software with existing systems
High cost of re-integration work
Legal bindings and terms of the existing licensing agreements

B2BITS works closely with the companies seeking to upgrade their FIX connectivity solutions helping develop strategy for managing FIX, FIXML, and FAST enabled software. The replacement program for Java, .NET and C++ based FIX engines is designed to satisfy the evolving needs of commercial , in-house developed, and open source FIX solution users. B2BITS helps address the challenges of re-engineering the FIX connectivity layer by providing a complete set of services.

For commercial software users we offer:

Assessment of the current state and elaboration of the rationale and actionable recommendations
In case of a change necessity, B2BITS will prepare a detailed plan for product acquisition and integration work scope
Proof of Concept for porting from a vendor solution or in-house system to FIX Antenna
To clients holding unexpired licenses, a free license until the expiration of the existing licenses, regardless of the number of engines*
Integration works from the low-cost development centers in Eastern Europe

For users of in-house developed solutions:

Assessment of the current state and elaboration of the rationale and actionable recommendations
In case of a change necessity, B2BITS will prepare a detailed plan for product acquisition and integration work scope
Proof of Concept for porting from a vendor solution or in-house system to FIX Antenna
As an incentive for the change, B2BITS provides a free 3-month license regardless of the number of engines
Integration works from the low-cost development centers in Eastern Europe

For open source FIX solution users:

Assessment of the current state and elaboration of the rationale and actionable recommendations
A 1-month evaluation license to demonstrate B2BITS’ FIX engine solution performance, which significantly exceeds that of the open source solutions
As an incentive for the change, B2BITS provides a free 3-month license regardless of the number of engines
Integration work is provided from the low-cost development centers in Eastern Europe, if required

Thanks to FIX Antenna’s superior efficiency, the FIX services, which are usually provided by multiple servers, now can be run on a single server instance, thus bringing extra technical and economical advantage to the users.

About EPAM Systems

Established in 1993, US-based EPAM Systems is the leading global software engineering and IT consulting provider with delivery centers in Central and Eastern Europe and client facing operations in North America, Germany, Sweden, Switzerland, and the UK. Currently EPAM counts 5,000+ professionals deployed across development locations globally recognized for unmatched excellence in software outsourcing – Eastern Europe’s Russia, Belarus, Ukraine, and Hungary. EPAM delivers complex software product engineering for leading global software and technology vendors, as well as development, testing, maintenance, and support of mission critical business applications and vertically oriented IT consulting services for global Fortune 2000 corporations.

B2BITS®, EPAM Systems Capital Markets Competency Center, delivers solutions that cover trading and operations in all asset classes including Equities, FX, Options, and Fixed Income. The Center’s reusable frameworks and components include OMS, matching engines, market data feeds adapters, exchange gateways, and electronic payment services utilized in many trading firms, banks, brokerage and clearing houses, as well as exchanges.

Russia Information Technology Report Released

2010-06-22T05:06:00.000-07:00

Within the overall current Russian economic pickup, analysts particularly single out Russia’s technology sector and appropriate it one of the leading roles in establishing the favorable business landscape. The latest “Russia Information Technology Report Q2 2010” testifies that the Russian IT market is expected to recover in 2010 from a double-digit contraction in spending on IT products and services suffered in the generically tough 2009.

Below we highlight some extracts from the report touching upon the market segments of IT services and offshore software development. Russia continues to gain momentum and emerges as a strong rival on the global arena.

Software

Russia’s domestic software market is projected at around US$3.1bn in 2010. Spending on software is forecast to return to positive growth territory, after demand was hit in 2009 by the much sharper decline in PC sales. Going forward, the market is projected to grow at a CAGR of 15% to US$5.3bn by 2014, making Russia potentially one of the most significant global software market opportunities.

The domestic software market is forecast at around US$3.1bn in 2009. There are, unsurprisingly, regional disparities, with Moscow some way ahead of its closest rival St Petersburg in terms of enterprise resource planning (ERP) deployments.

IT Services

The IT services market is projected value of US$3.8bn in 2010, which will represent some recovery from 2009 when the market experienced a sharp contraction. The IT services opportunity is forecast to grow to around US$7.2bn by 2014 as the IT market gradually recovers from recent external shocks. The broader use of ICT in government and other sectors will ensure an upward market trajectory in the medium term. Systems integration is the largest IT services component, with as much as one-third of segment revenues and, together with implementation of hardware and software, probably account for about half of all IT services. However, more value-added services such as consulting and applications development are growing fast. Outsourcing is also on the rise, although below the levels in some other Central and Eastern European (CEE) countries.

Source: Companies and Markets

Barclays Capital to build global technology facility in Kyiv to create Ukraine’s largest and most secure technology centre

2010-06-14T06:11:00.000-07:00

Barclays Capital, the investment banking division of Barclays Bank PLC, announced today it has chosen Kyiv as the location for its third global technology centre, adding to those already established in Singapore and Prague. EPAM Systems, the largest and most experience software engineering services provider in Eastern Europe, has been selected as the partner to build and operate Ukraine’s most advanced and secure IT facility, with a team of up to 500 IT professionals in Kyiv by the end of 2012.

Ukraine was chosen because of the exceptional local technical talent and strong analytical skills available. This investment in Kyiv allows Barclays Capital to further diversify its workforce locations and the firm will grow globally by 800 IT professionals in 2010 with continued growth anticipated over the coming years.

“Kyiv is a key strategic centre within our technology growth plans going forward. Utilising the most advanced hardware, software tools and security infrastructure available, the Kyiv centre will be at the leading edge of global competitiveness for quality and for innovation. We are exceedingly impressed with the 50 plus engineers that have already started,” said Sarah Grave, Head of IT EMEA, Prague and Kyiv at Barclays Capital.

The teams will focus on Application Development for in-house projects in C++, Java or C# for a wide range of business applications across the bank, ranging from electronic trading applications to risk management systems. The Kyiv facility has been built by EPAM to operate within the bank’s highly secure continuous service environment, providing 24/7 services to maintain business applications and provide support to the firm’s business users for many mission critical applications.

Barclays Capital and EPAM are investing in Kyiv for the long term, with the technology centre not only providing excellent working conditions, but very clear long-term career paths for the team members in product and application development, management, operation, support, and testing software. Russia along with Ukraine are the two leaders in the CEE region in terms of a number of annual IT graduates and steady rise in the popularity of IT jobs.

“The Kyiv centre will provide the essential front-line services necessary for the operation of Barclays Capital’s global banking business,” said Karl Robb, President EPAM Europe. “This reflects our client’s strong faith in Ukrainian IT talent and in EPAM Systems proven track record of establishing large software engineering teams operating in highly secure environments to the world’s top technology firms and financial institutions.”

Through EPAM, Barclays Capital will make an initial capital investment of more than US$2 million in the highest standard of technology infrastructure from Hewlett Packard, Cisco and Microsoft among others, creating the most secure and state-of-the-art facility in the Ukraine, within EPAM’s premises. The very latest workstation and network equipment will be deployed along with power equipment providing business continuity to operate 24/7.

Notes for Editors

For further information please contact:

Jon Laycock, Barclays Capital Communications +44 207 773 4324 jon.laycock@barcap.com

EPAM Receives Preferred Supplier Status from Bosch Group

2010-06-11T01:17:00.000-07:00

Newtown, PA — June 10, 2010 — EPAM Systems, Inc., the leading software engineering and IT Outsourcing (ITO) provider in Central and Eastern Europe (CEE), announced today that it has been selected as a Preferred Supplier of the Bosch Group, an award in recognition and appreciation of EPAM’s outstanding performance in custom software development and application support during the last 3 years.

EPAM has been a development partner to the Bosch Group since 2007, successfully delivering several critical software development projects, the latest achievement being a custom Supplier Relationship Management (SRM) system that replaced multiple legacy applications underpinning the business dealings with tens of thousands of global suppliers and also provides sophisticated SRM specific BI features to Bosch’s executive leadership. The solution was developed and is continually enhanced and supported by EPAM’s engineering teams led by business analysts and engagement management from EPAM Germany, together with engineering teams in the development centers in CEE that provide a balance of domain and process knowledge with technology and management skills in software development and testing. Belarus and Russia locate the largest part of EPAM’s engineering talent pool.

“Any client award or recognition is an honor for the whole staff of EPAM. In this case, given the well-known, stringent levels of excellence and quality that the Bosch Group demands globally in all forms of engineering including software, our teams should be exceedingly proud to be recognized in the upper echelons of Bosch's supplier eco-system with this Preferred Supplier status,” commented Karl Robb, President EU Operations, EVP EPAM Group. “EPAM’s unmatched technology skills, extensive domain knowledge and excellence in distributed delivery of complex software solutions has resulted in a robust, flexible, high throughout, high-availability application that provides our client with significant process optimization and a competitive business edge.”

About the Bosch Group
The Bosch Group is a leading global supplier of technology and services. In the areas of automotive and industrial technology, consumer goods, and building technology, some 275,000 associates generated sales of 38.2 billion euros in the areas of automotive and industrial technology, consumer goods, and building technology in fiscal 2009. The Bosch Group comprises Robert Bosch GmbH and its more than 300 subsidiaries and regional companies in over 60 countries. If its sales and service partners are included, then Bosch is represented in roughly 150 countries. This worldwide development, manufacturing, and sales network is the foundation for growth. Each year, Bosch spends more than 3.5 billion euros for research and development, and applies for some 3,800 patents worldwide. With all its products and services, Bosch enhances the quality of life by providing solutions which are both innovative and beneficial.

For more information, visit www.bosch.com.

About EPAM Systems
Established in 1993, EPAM Systems, Inc. is the leading global software engineering and IT consulting provider with development centers throughout Central and Eastern Europe. Headquartered in the United States, EPAM employs over 5,000 professionals and provides services to clients worldwide utilizing a global delivery model through its client facing and delivery operations in North America, UK, Germany, Switzerland, Sweden, Russia, Belarus, Hungary, Ukraine, and Kazakhstan.

EPAM's core competencies include complex software product engineering for leading global software and technology vendors, as well as development, testing, maintenance, and support of mission critical business applications and vertically oriented IT consulting services for global Fortune 2000 corporations.

EPAM is recognized among the top companies in IAOP's "The 2010 Global Outsourcing 100" and in "The 2009 Global Services 100" by Global Services Magazine and neoIT. The company is the only CEE's IT services vendor included in the global "Top 10 Best Performers: IT Services" and also ranked 2nd among the world's "Top 10 Best Performers: Outsourced Product Development" according to the magazine's 2009 rating.

European IT Outsourcing Trends: CEE Gains Momentum

2010-06-08T04:27:00.000-07:00

IT Sourcing Europe, a European company specializing in nearshore IT outsourcing consultancy as well as market research and analysis, has announced the completion of its “European IT Outsourcing (ITO) Intelligence Report 2010: Central and Eastern Europe”. This is a comprehensive study of the European IT outsourcing demand and market trends. The Report targets at all types of Western European companies who either outsource or plan to outsource their IT functions nearshore.

The IT Sourcing Europe’s Report shows that:

• Outsourcing to Central and Eastern Europe is expected to grow over the next 10 years;

• Investors and management anticipate 30% revenue growth in 2010;

• CEE, above all regions, is expected to leverage its competitive advantage in the high-growth areas of offshoring and nearshoring and possibly move ahead as the most attractive labour arbitrage alternative for Western European clients;

• Low labour costs are not the only grounds for outsourcing. The human capital of the CEE region is one of the primary reasons why Western companies choose to outsource there.

Regarding the major ITO trends, 2010 anticipates a significant change in the European IT Outsourcing landscape:

• More small and mid-sized organizations are expected to outsource their software/web development nearshore, compared to pre-crisis times.

• Additionally, buyers become more demanding and challenge their ITO partners to differentiate their position and value.

• Today’s Western European companies are seeking a combination of speed, cost management and growth supported by business agility and technological innovation.

Source: IT Sourcing Europe

$50 Billion Saved Through Sourcing

2010-06-02T05:14:00.000-07:00

According to a survey conducted by TPI, the leading global sourcing advisory firm, companies have reduced their spend on IT services and business transformation by almost one fifth by turning to outsourcers, thus saving $50 bn.

The firm surveyed 120 companies it had advised on sourcing over the last five years. TPI found its clients saved on average more than 33 per cent. After one-time and ongoing management expenses, the savings averaged more than 17 per cent.

According to TPI chairman and CEO Michael Connors the majority of businesses, 60 per cent, said that reducing costs was "their number one reason for implementing sourcing strategies".

Last year Europe became the world's highest spender on outsourcing, with companies based in Europe spending more on IT outsourcing than those based in any other region of the world.

Source: TPI

Software R&D globalization

2010-05-27T03:48:00.000-07:00

Zinnov, meaning Zeal in Innovation, the leading management consulting company, has recently provided a study - “Software R&D and Globalization Insights”. The scope of the study is to conduct a global software R&D spend analysis across a group of software product companies. To gain insights on the topic multiple stakeholders such as Vice Presidents, Senior Directors, General Managers, were interviewed.

Some of the findings of the survey are:

• The impact of the economic uncertainty was visible on R&D budgets as companies planned to optimize on the investments over the last 12 months. Some of the small to midsized companies (less than USD 1 bn in revenue) have been able to keep the R&D investments low, as they offshore a significant portion of their R&D to low cost destinations such as India and China. For larger companies, most of the R&D investments (about 80%) are kept in the US.

• Most large companies are now looking towards keeping R&D budgets flat while increasing their investment on new products. This has led companies to invest more on new development related activities in the product development life cycle. As a result, the quality of talent has become critical and companies are now laying emphasis on hiring talent so as to maintain effective staffing ratio. The focus on quality mandates increased investments on R&D related workforce for a majority of companies.

• More development and QA/testing related work is expected to be sent to offshore locations hence reducing the total investment on mature products

• Most large companies are now looking towards maximized value, rather than a pure cost arbitrage in terms of their relationships with product development service providers. However, the percentage of outsourced projects is still pretty low meaning there’s a bright future awaiting outsourced product development (OPD) industry.

Source: Zinnov

Vertical IT Spending to Go Upwards

2010-05-20T05:48:00.000-07:00

According to a new report from IT research and advisory firm Gartner, IT spending across all industry markets is forecast to exceed $2.4 trillion in 2010, an increase of 4.1% compared to same period last year, with banking and financial industries leading the way. Government agencies and health care providers are also expected to boost their IT this year.

The report says that IT spending by banking and financial industries will grow by 4.6% to $396.9bn in 2010, while total IT spending by communications media and services market is expected to reach $394.2bn, marking a 4.4% increase from the previous year. National and international government will show the strongest growth in 2010, with an increase of 6.2% in IT spending. Manufacturing and natural resources, and wholesale trade will experience the weakest growth through 2014, growing at 2009-2014 CAGRs of 3.0% and 3.1%, respectively.

"2010 will see IT spending in all major industries returning to growth, although that growth will vary by individual sector", Gartner analyst Kenneth Brant said.

Source: CBRonline.com

European IT Services Market Growth

2010-05-14T00:52:00.000-07:00

According to a recent report provided by the International Data Corporation (IDC), the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets, demand for IT services is anticipated to grow by 2.2 per cent for the year 2011, with IT outsourcing being the main driver behind this.

The study shows that IT budgets have stabilized along with the easing of economic conditions, resulting in some companies to slowly start increasing spend again. Laura Converso, research manager, IDC European Software and Services, said: "Demand for outsourcing will pick up towards the second half of 2010."

She also added that the need for IT services will be most prominent this year in the UK, Germany and the Nordics.

Source: ihotdesk

Healthy Growth of BI Market

2010-05-07T07:16:00.000-07:00

According to a new report from market research firm Gartner, Inc., the business intelligence software market was one of the segments that significantly outperformed the overall enterprise software market in 2009.

The study revealed that the worldwide market for business intelligence, analytic applications and performance management software saw revenues exceed $9.3 billion last year, a rise of more than four per cent compared with 2008 revenues of $8.9billion.

“Even though growth was nowhere near the levels of 2008, and by no means immune to the recession, BI showed that it is not as cyclical as many other software areas, recording healthy growth in one of the toughest years recorded in software history," said Dan Sommer, a senior research analyst at Gartner.

BI was one area of IT that businesses were not prepared to push aside due to cost pressures. Mr. Sommer explained that “organizations have generally continued their BI projects, hoping that the resulting transparency will allow them to cut costs and improve productivity in a bid to remain competitive”.

Source: ihotdesk

Russia Information Technology Report Q2 2010: Russian IT market is on the Rise

2010-04-27T05:45:00.000-07:00

According to a new Information Technology Research report from Business Monitor International (BMI), the leading, independent provider of proprietary data, analysis, ratings, rankings and forecasts, covering the global market of IT services outsourcing and offshore software development, Russia is expected to start to recover in 2010 from a significant contraction in spending on IT products and services in 2009.

In 2010, the Russian IT market is forecast to grow to US$15bn, up substantially on 2009. Growing computer penetration, government ICT projects and rich potential for IT spending by Russia’s traditional industries could drive an increase in IT spending per capita from around US$107 in 2010 to US$190 by 2014, the report says.

As for the domestic software market it is projected at around US$3.1bn in 2010 and by 2014 it will grow at a CAGR of 15% to US$5.3bn, making Russia potentially one of the most significant global software market opportunities.

BMI projects an IT services market value of US$3.8bn in 2010. The IT services opportunity is forecast to grow to around US$7.2bn by 2014. The broader use of ICT in government and other sectors will ensure an upward market trajectory in the medium term. Systems integration is the largest IT services component, with as much as one-third of segment revenues and, together with implementation of hardware and software, probably account for about half of all IT services. However, more value-added services such as consulting and applications development are growing fast. Outsourcing is also on the rise.

Source: Fast Market Research

ITO Firms in CEE Prioritize Security of Clients’ Data

2010-04-19T09:21:00.000-07:00

Risk mitigation in IT outsourcing engagements has become a hot topic recently. It was scrutinized in a recent Everest Group’s whitepaper titled "Emerging Markets Suppliers: A valuable Lever for Risks Diversification" providing a list of recommended, “must-know” vendors in 6 ITO destinations that compete with India. Central and Eastern Europe (CEE) was represented by its leading full-cycle software services provider EPAM Systems.

At a webinar earlier this year, Everest announced their outsourcing market forecast for 2010, where they stated that in a recovering economy the key ITO vendors would transform their approach in order to shift more risks away from the clients.

With delivery models and contracting structures being updated and adjusted to the buyers’ needs and expectations, the leading service providers keep investing into safeguarding their customers’ information. After the assessment of its multiple CEE development centers for the SAS 70 Type II requirements, EPAM took the lead in security in the CEE’s ITO industry. Last week the company announced that it had also received ISO/IEC 27001:2005 certification for its Information Security Management System (ISMS). The scope of the certificate is “Outsourced software development in accordance with the latest version of the Statement of Applicability.”

"This certificate demonstrates EPAM’s dedication to protecting its clients’ information assets and addressing security concerns by defining and maintaining the strictest security policies and verifying their adherence by recognized industry standards. “ISO 270001:2005 and existing SAS 70 Type II certification combined continue our position of leadership in security for our industry and region and are vital parts of EPAM’s global strategy,” stated Balazs Fejes, EPAM CTO.

László Adlovits, Country Manager at Det Norske Veritas, said: “During this process, it was clear that EPAM surpassed the required level and showed a mature and well implemented information security management system."

Happy Future for Outsourcing in 2010

2010-04-05T04:45:00.000-07:00

Horses for Sources, the foremost social networking community and advisory analyst firm, published its first research report - “The IT Outsourcing and Business Process Outsourcing Industry Landscape in 2010”. The report was conducted on the basis of the opinion of 1,055 senior executives involved with either buying, selling or advising outsourcing services.

According to the report the year of 2010 is primed to be very strong for outsourcing adoption. In particular, IT outsourcing is expected to peak this year. The delivery models for standard ITO services are mature and scalable enough to cope with the demand.
Some other key findings of the report are:
- The middle-market ($750m-$3000m annual revenues) is poised to be the most active.
- Customers are anticipating more business benefits from outsourcing than merely driving out some initial cost. More than half of all customers cite the need to globalize and transform processes as prime outsourcing motives. And this is across all size classes of customers. The need to globalize is impacting all companies, and outsourcing is providing one vehicle to help firms achieve it.
- When evaluating vendors, global scale, financial stability and operational excellence are the table-stakes. Business transformation capabilities are the differentiators.

Source: Research report “The IT Outsourcing and Business Process Outsourcing Industry Landscape in 2010”

New Horizons for Outsourcing

2010-03-24T08:47:00.000-07:00

The recent world economic recession, when everybody was trying to stay afloat, made many cut their IT budgets. Now, when the worst seems to be behind, companies are starting moving forward with renewed trust in the stability and growth of economic markets, leading to increased outsourcing activity. But there’s been a certain shift in how corporations regard outsourcing trying to answer why, what, how and where questions. Why do we outsource? Why do we offshore? What do we actually get in return? How do we really benefit? How, if at all, do our customers benefit?

Michael Morris, Head of Outsourcing Search and Selection at Essentia Consulting, is sure that outsourcing is back now, it has weathered the economic storm and businesses will return to using outsourcing to recapture innovation and maximize their ROI in 2010. But if some five years ago outsourcing was considered primarily a good way to reduce costs, from 2010 onwards, with new deals signed and new management potentially in place in many companies, everything is screaming return on investment (ROI). Clients are demanding quicker, more transparent results and this development will shape the majority of future outsourcing deals.

As for offshoring, India still remains its hotbed but with more options available. With more delivery centers in Eastern Europe as well as in Asia, Central and South America the competition between outsourcing providers will strengthen and that will “drive a focus on services differentiation, bundling of services and greater intimacy with customers through outsourcing relationship management (ORM)” as Matt Shocklee, COP, president and CEO of Global Sourcing Optimisation Services and IAOP US Ambassador, says.

Source: EUcommerz

EU Enlargement and Nearshoring

2010-03-15T04:41:00.000-07:00

With the accession of new Member states in 2004 and 2007 the European Union grew to 27 countries. The trend of nearshore software development outsourcing to Central Europe that started in mid 1990s, became much stronger. Initially it started as outsourcing smaller projects by small and mid-size companies. Shortly, the region has arrested the attention of the global IT players like Capgemini and EPAM Systems, therefore enhancing the scope of the projects outsourced, and enabling the region to compete with well-established Indian and Chinese IT providers.

According to the recent data provided by Deutsche Bank Research, the overwhelming majority of German, Swiss and Austrian vendors still outsource their IT activities to Czech, Slovak Republic, and Hungary preferring them to more remote Asian destinations. However, the impact of EU enlargement on the Central European outsourcing market is forked. While expanding the market of IT services, fostering both demand and supply growth, it may lead to labour costs increase, consequently rising the development costs. And as Natasha Starkell, CEO of Goal Europe has noted the “higher wages will push offshoring further east”, namely to Russia, Ukraine, and Belarus. Product development, software testing, and application reengineering are already in high demand in the emerging markets.

Eastern Europe enjoys cultural and geo proximity to Western Europe, has a large pool of highly educated professionals, especially in the field of math, science, physics, and IT which makes it an attractive nearshore outsourcing destination for EU enterprises. Moreover, as baby boomers retire and Western Europe runs out of engineers and other highly qualified staff, even more IT work will move to Eastern Europe.

Source: levhouse.com

Looking Eastern Direction: Russia's IT Landscape

2010-03-02T00:57:00.000-08:00

In the present post we’d like to catch your eye to the recently issued “Russia Information Technology Report Q1 2010”. The report gives a comprehensive view of the Russian IT market for the next couple of years. The main point, looking forward Russia is on the course to emerge as one of the largest IT markets in Europe. In 2010, after the downward year 2009, the Russian IT market is forecast to recover to US$15.9bn, up 12% on 2009, which looks like a good start. Growing computer penetration, government ICT projects and immense potential for IT spending by Russia's traditional industries could drive an increase in IT spending per capita from around US$113 to US$185 over the 2010-2014 period.

Below we present a more detailed description of the most significant market segments.

• IT Services – The Companies and Markets’ analysts project an IT services market value of US$4.1bn in 2010, which is definitely a recovery from 2009 when the market experienced a sharp contraction. The IT services opportunity is forecast to grow to around US$7.0bn by 2014, as the IT market gradually recovers. Systems integration is the largest IT services component, with as much as one-third of segment revenues and, together with implementation of hardware and software, probably account for about half of all IT services. More value-added services such as consulting and applications development are growing fast. Outsourcing is also on the rise.

• Software – The domestic software market is projected at around US$3.2bn in 2010. Going forward, the market is projected to grow at a CAGR of 14% to US$5.4bn by 2014, making Russia potentially one of the most significant global software market opportunities.

• Hardware – The computer hardware market is forecast to recover to US$8.7bn in 2010, up from US$7.5bn the previous year but still short of 2008 levels.

• Competitive Landscape – Russia is strengthening its positions as a lucrative spot for doing business, which has already been recognized by a good many industry leaders. In November 2009, Microsoft said that it was considering launching its own retail presence in Russia in 2010. Acer brand Packard Bell said that it plans to achieve a 10% share of the Russian notebook segment by 2012, from just 1.5% currently. And that is just to name a few. Don’t overlook your business opportunities in the lucrative destination gaining momentum.

Source: Companies and Markets

Outsourcing Potential 2010 – How Does It Look Like? (Part 3)

2010-02-01T04:19:00.000-08:00

Gartner, among its altogether 250 predictions, this year makes emphasis on the themes of shifting ownership and revenue flows. As the macro-economic environment adjusts to a new balance between supply, consumer demand and regulation, the focus of this year's top predictions has expanded to encompass shifts in the way that users interact with IT. "As organizations make plans to navigate the economic recovery and prepare for the return to growth, our predictions for 2010 focus on the impact of critical changes in the balance of control and power in IT," said Brian Gammage, Vice President and research fellow at Gartner. "With greater financial and regulatory oversight for all IT investment decisions, few organizations will be unaffected." Although most organizations enter 2010 preparing for a return to growth, financial oversight is unlikely to be lifted anytime soon with CFOs overtaking a more active role.

Although most analysts agree that the year to come brings optimism to the software industry, let’s not make it all milk and honey. Despite the omnipresent upbeat tone of these predictions, the IAOP warns that global economic uncertainty and currency fluctuations still remain and may not be disregarded. According to the analyst house, this is predicted to lead to increasing levels of mergers and acquisitions, which will in turn “drive higher value services and continue to put pressure on other players to be more strategic in their offerings”, says Jagdish Dalal, IAOP’s managing director of thought leadership.

All in all, IT decision makers enter the new decade with hope on the horizon and leave behind one of the most difficult years in memory. According to a report by information and communications technology research and advisory firm XMG Global, “outsourcing will present its full potential once more in 2010.”

Outsourcing Potential 2010 – How Does It Look Like? (Part 2)

2010-01-29T01:29:00.000-08:00

Another pronounced trend of the coming year shows up in the shifting global markets. The survey by the global consultancy PricewaterhouseCoopers (PwC) and Duke University's Offshoring Research Network stated that the outsourcing industry is transforming due to the emergence of new providers around the world and efforts of existing outsourcers to expand into new markets. "Outsourcing companies in North America and India, which have long dominated the industry, are being challenged by competition from Latin America, Eastern Europe and Asia in service areas such as contact centers, business process outsourcing, and information technology outsourcing," the survey revealed.

Near-shoring has gained momentum among companies considering outsourcing services. Growing competition has transformed outsourcing industry into a global race for market share where emerging economies are rapidly seeking to expand in the sector. In particular, Central and Eastern Europe has revealed its potential as a strong rival grabbing its market share on the global scale. In our previous post we’ve drawn your attention to the latest Everest research featuring EPAM Systems as a leading vendor from the CEE region challenging some established global leaders in the software outsourcing industry. This year’s NOA predictions also touch upon this trend noting “Russia will increase in prominence on the world stage”.

Apart from that, NOA's annual predictions scrutinize over such issues as public sector deals growth, growth of green technologies and 'green sourcing' arrangements, innovation in services and products, and a declining trend in signing big contracts.

Douglas Hayward, analyst at IDC, draws our attention to the shift in the outsourcing models and states that in the new decade outsourcing suppliers will increasingly be paid depending on the volume of services used. "2010 will see a strong increase in the use of outcome-based payment models, as enterprises extract better value from service providers. Outcome-based models allow enterprises more easily to scale service consumption up or down, making costs more variable. […] They will cease to be seen as experimental, and will become accepted as a normal part of the contract toolkit," he says.

Outsourcing Potential 2010 – How Does It Look Like? (Part 1)

2010-01-27T01:18:00.000-08:00

In the passing tough year best remembered for crisis, loss of jobs, and overall uncertainty, the outsourcing industry has made many gloomy headlines in the news resources. Interesting enough to note that the end of the year brings forecasts for the IT community as optimistic as long not heard. After the brutal 2009, we’re glad to receive some encouraging news again. With the leading and most trusted Forrester and Gartner at the front of the line, most other analyst houses and industry associations including IDC, IAOP, NOA echo with optimistic releases. Rejoice, IT! We’ve made it through!

The Forrester’s loud statement “Tech downturn officially over” gave way to numerous sequential prognostications the quintessence of which sounds as follows: IT spending is set to grow in the coming year. Below we’ve summarized the key findings from leading analyst firms with most significant predictions and relevant figures for 2010.

The analyst guru Forrester predicts that spending in the IT industry will rise 8.1% to more than $1.6 trillion, driven by an improvement in the wider economic situation and a new cycle of tech innovation and growth. “2010 will be a much better year. […] We’re not talking boom yet, so we are not predicting double-digit growth rates across the tech market,” said the Forrester report’s author Andrew Bartels. “But, as our latest tech market report shows we do think there will be a solid tech recovery in 2010, with growth rates in the high single digits.”

Bartels also said that he expects big businesses will lead the IT spending, rather than SMBs. “For large corporations, the financial crisis is mostly over – they can tap the corporate bond, commercial paper, and equity markets as they did before. But SMBs depend on banks for financing, and banks are still making it hard to borrow.”

Forrester is expecting that spending on computer hardware and software will lead the way in 2010, with hardware spending up 8.2 percent and software spending up 9.7 percent. Communications equipment makers will see an increase in spending of 7.6 percent, IT consulting and system integration services will rise by 6.8 percent, and outsourcing services will exhibit 7.1 percent growth.

Indian Outsourcers Get Shivers As Local Rivals Push Up

2010-01-14T02:35:00.000-08:00

A new trend is rapidly developing on the current global IT market – instead of sending all projects to offshore locations like India, emerging local rivals are becoming more and more attractive for big outsourcing customers. Let’s analyze the reasons why.

Globalization imposes tougher competition on the market, solely performance and capacity are no more enough, and even cost issues presently lose ground as the key differentiating factor. Customers seek quality, innovation, and value to their business. That is exactly what rivals in emerging outsourcing destinations like Central and Eastern Europe are staking on and are eager to provide. An increasing amount of companies are looking closer at local vendors who are winning through mature software engineering processes, reputation, and IT service quality. This is also recognized by leading analyst firms, including Everest.

“For many customers who already have significant presence in offshore locations like India, it’s a risk diversification,” said Jimit Arora, Research Director of outsourcing advisory firm Everest Group. “Some customers having 70-80 per cent of their offshore resources in India are realizing that they need to look at the third category of suppliers that are local and niche,” he added.

Everest has recently researched six emerging destinations mature enough to be considered as viable alternatives to the India-centric outsourcing model. Scrutinizing one of the world’s top 3 outsourcing locations – Central and Eastern Europe - the report features EPAM Systems as a leading, “must-know” IT outsourcing services supplier with roots in the region.

A free copy of Everest’s “Emerging Market Suppliers: A Valuable Lever for Risk Diversification” report is available at http://epam.com/analysts.htm.

Becoming a Preferred Outsourcing Destination

2009-12-09T06:48:00.000-08:00

New sourcing destinations which form regional clusters are springing up all over the globe quite often now. Companies looking for alternative to India locations have a wide choice of virtually any sourcing region to do business. And countries within these clusters face the challenge of becoming a preferred sourcing location.

Here are some of the key success strategies for winning destinations:

- focus on establishing favorable tax and regulatory environments, implementing government incentives, investing in high quality infrastructure, reducing attrition, and facilitating access to a qualified workforce;

- learn from the experience of established destinations noting the policies, incentives and initiatives these former emerging locations undertook to achieve success;

- ensure a sustainable supply of qualified labor. Countries should have a workforce strategy to continue to scale as well as diversify their skills sets;

- find your niche. As the playing field becomes more competitive, it’s necessary for countries to differentiate not only on the basis of cost, quality etc. but also in terms of the depth, specialization and expertise of their workforce;

- let the world know about you. Ensuring global visibility — especially in prime markets such as US and Europe — should be top priority. Branding that accentuates the region’s uniqueness can have a great impact;

- encourage import of expert resources from established locations and target markets, especially if there are ex-pat’s who can be convinced to return home. Inviting well-known industry evangelists (read consultants, analysts, etc) is also very effective in building goodwill and positive buzz;

- promote benefits of outsourcing industry within the local market. This can be done by convincing domestic or multinational firms to outsource locally or “carve out“their internal operations. Local service providers can be incentivized to build a domestic market.

Source: Global Services

Europeans Unhappy and Look Beyond India

2009-11-26T06:54:00.000-08:00

According to Forrester Research at least 60% of the polled European companies are willing to outsource to destinations different from India.

The volume of India’s ITO and ВРО service reached 14 billion euro in 2008 with UK, Germany and France making 11, 7 billion. However not many European buyers show loyalty to Indian service providers. The polled companies plan to continue engaging outsourcers from different countries, but very few mentioned India as their preferred offshore outsourcing destination.

Analysts believe that language barriers and challenging tasks to organize cooperation with providers from other countries are additional barriers for the expansion of Indian service business in Europe. The outsourcing model successfully employed by Indian IT service providers on the North American market doesn’t looks successful in continental Europe. As Forrester Research analysts emphasize, business of European companies differs from the American model and optimal outsourcing schemes should vary in these regions as well. So far Indian IT service providers have employed the American model in Europe. In particular, they keep launching client support offices in their target markets in order to solidify their market position locally.

Source: CNews

Central and Eastern European Software Engineering Conference Gains Momentum

2009-11-13T06:54:00.000-08:00

The 5th Central and Eastern European Software Engineering Conference in Russia (CEE-SECR 2009), the key software event in CEE region, was held in Moscow at the end of October. What initially was positioned as a Russia focused event back in 2005, gradually evolved into a large-scale regional software developers’ conference attended by over 500 software experts from 15+ countries.

The conference is an excellent meeting point for software professionals from Central and Eastern Europe and Russia providing them with an opportunity to share valuable experience and best practices, discuss challenges and innovations, to communicate with colleagues, find partners and clients.

This year the agenda, to say the least, was full. Keynote speakers from Google, IBM, Microsoft, Tibco and other companies covered such hot topics as the synergistic effect of Agile-CMMI combination, Enterprise Security Assessment Sharing system, best practices in software architecture, including Total Architecture approach, new content-based communication services, and testing software. Russia and Eastern Europe at large are nowadays listed among the most favorable and fastest growing software outsourcing spots gaining increasing attention of Western clients.

ICT Sector as a Tool for Overcoming Crisis

2009-11-06T07:12:00.000-08:00

Recently RUSSOFT Association and Brazilian Association of Information and Communication Technology Companies (BRASSCOM) held a video conference "BRIC IT-Initiative". IT community members from New-York, Hong-Kong and Saint Petersburg discussed the importance of joint efforts of BRIC countries aimed at the development of ICT sector as a tool for overcoming crisis and its consequences, as well as for building the New Economy based on knowledge and innovations.

In the course of the conference the text of the appeal to the governments of BRIC countries to develop the IT sector and to support international cooperation between these countries in the ICT field was approved. This appeal was also approved by the China Council for International Investment Promotion (CCIIP).

One of the speakers of the conference, Valentin Makarov, President of RUSSOFT, said: "The opportunity created by IT has to be seen by the national authorities and decision makers as a priority and tools for both - recovery from the crisis and creation of New Economy based on Knowledge and Innovations. This is especially true for the BRIC countries, once the emerging economies need a broad support from the Government in order to intensify the implementation of IT into their respective countries and to expand their competitiveness in the global market".

Another speaker, Wolfgang Petersen, EMEA SSG Director of Intel, noted: "….the other thing that is definitely worth for investing resources is software development. We see a strong raising opportunity in the software development area for BRIC countries which are the source forge for the world."

Source: RUSSOFT

Upturn in IT Business, Forrester Predicts

2009-10-19T01:58:00.000-07:00

The analyst firm Forrester Research forecasts growing budgets and overall upturn in the IT business staring from the next quarter.

Andrew Bartels, analyst at Forrester and author of the report, inspires the industry vendors with optimism and gives an encouraging outlook for the approaching quarter. The report "US and Global IT Outlook: Q3 2009" speculates that the bottom of the IT tech market happened in the first and second quarters of this year. Analysis of that market is based on the sales of computers and peripheral equipment, communications equipment, software, IT consulting services, and IT outsourcing services.

The report further provides detailed branch statistics. Summarized, it reads as follows:

· the use of IT consulting services will increase by 11.7 percent in 2010;
· software purchases will be up by 9.3 percent;
· computer equipment sales will increase by 8.3 percent and communications equipment sales will show a bump at 3.6 percent;
· outsourcing will rise by 4.5 percent in 2010.

Bartels predicts that enterprise businesses will be the first to reinvest in IT and lead the revival of the tech boom.

Source: Redmond Developer News

Survey: IT Development Budgets On the Rise

2009-09-29T08:19:00.000-07:00

According to the latest IDC survey, IT development projects are on the rise in 2009.

With more than 6,000 respondents surveyed, there’s a pronounced tendency that IT budgets are increasing this year and the overall IT landscape looks more promising. Respondents were senior business leaders and software development professionals from independent software vendors, enterprises with more than 500 employees, SMEs, and other organizations for which software development was a key business focus or priority.

The major takeaways from the survey read:
• 38% of companies are outsourcing "some software development" to India, China, Ukraine and other Eastern European countries;
• 71% of respondents said new product or software development was a "top priority" for their organization;
• 51% of respondents said "saving money" was a top priority for their organization;
• 42% of respondents said agile methodologies were their software development models of choice,
• 36% of companies use Capability Maturity Model Integration as their process maturity and quality model;
• 62% of respondents focus their software development efforts on enterprise applications;
• 51% of respondents focus their software development efforts on Web-based applications;
• 42% of organizations execute software customization and integration in different systems and environments.

Rona Shuchat, director of Application Outsourcing Services at IDC, sums up: "During this economic recession, the competitive application outsourcing arena has become even more fierce as customers push for lower cost and improved operational efficiencies. Flexible, consistent delivery and management models, alongside scalability, reliability and high performance, will be critical as new hosting models become viable alternatives to the enterprise."

Source: Integration Developer News

Agile Outsourcing: Taking the Lead!

2009-09-21T08:53:00.000-07:00

Agile methodologies such as agile software development and continuous process improvement are considered more suitable for software development outsourcing than traditional ones. Now they are seen as critical factors for software projects success and customer satisfaction. Why is it so? Let’s see.

Methodology Fit. For any outsourcing or offshoring company, agile methodologies are more suitable than traditional ones. Agile software development and continuous process improvement offer the chance to make fine adjustments continuously on both sides to accommodate for these differences. Traditional methodologies in software development will almost always lead to fixed price contracts since the buyers of those services will insist upon it.

Bridging Communication Gaps. Even apart from the differences in language between the United States and India or the United States and the Philippines, imagine the differences in time zones, culture and work habits. Agile software development ensures that frequent releases bridge these communication gaps quickly.

Perfection Is an Iterative Process. When two disparate organizations work together, success can be achieved only iteratively with as many feedback loops as you can design into the effort as possible. Agile software development and continuous process improvement offer both buyers and sellers of outsourcing services the opportunity to achieve perfection iteratively.

Building Expertise. Service providers can move to using agile software development methodologies or billing customers on a transaction basis only if the sellers of these services aren't just executing a project or process but building expertise in that area.

Responsiveness to Change. Software requirements change over time. Business processes are evolving everyday due to competitive pressures as well as changes in the law. Agile methodologies are needed in outsourced software development to keep the development effort synchronized with changes in requirements.

Building Longer Term Partnerships. Building a partnership with your software development service provider makes it easier and better the next time you have another major software development effort come up.

Building Quality. Agile methodologies achieve something that is counterintuitive at first glance. You build things faster, but by doing so, you ensure better quality. Agile methodologies address serious problems in ways humans communicate. They do this by allowing faster and quicker feedback cycles so that course corrections are made as soon as possible.

Source: Global Services

It's Harvest Time in Central/Eastern Europe

2009-09-16T03:07:00.000-07:00

TEAM International is up with its latest summary of the Q1 2009 results for the CEE region. All in all, Central and Eastern Europe is positioned as an attractive IT offshore and nearshore outsourcing destination, with a number of bulleted conclusions and figures to support the finding. The major achievement is that there’s no doubt that CEE is no more a rising star, but a competent player in the software market.

Here are the other conclusions drawn as a result of thorough research works:

• More clients from Western Europe are choosing nearshoring IT functions to their less developed European neighbors rather than outsourcing to traditional Asian destinations. Organizations are no longer satisfied with just low-cost and are focusing on vendors’ competence, high-tech know-how and staff integration. CEE countries consistently execute high quality projects and have shown business and technical competence and cultural compatibility with customers from Western Europe and North America.

• The CEE region is ranked No 3-4 in the global marketplace in terms of the number of people involved in IT outsourcing and the value of provided services respectively.

• The CEE countries are notable for technology-oriented educational system and a solid Research & Development foundation.

• In 2008 CEE faced a small number of company closures and staff reduction (5-7% across the industry). In 2009 many new businesses and start-up projects boomed in the region.

Source: ITO News

The OI’s Founder Comments on Outsourcing Transformations

2009-09-02T07:38:00.000-07:00

Today, outsourcing is a widely used practice for organizations striving to improve their productivity and reduce costs. Having left doubts “if we should do it at all?” in the past, now they have to choose from a wide range of outsourcing destinations that exist and keep appearing on the global market to understand where their outsourcing best match is located.

Frank Casale, CEO and chairman of the Outsourcing Institute, gave an interview where he commented on how outsourcing has changed since its early days, and the factors that should be considered when outsourcing offshore.

In the early 90s most of the outsourcing was big deals with big companies that were in big trouble. And it was mostly U.S. Nowadays there are tons of outsourcing being done in the mid market and smaller firms.

Moreover, as Mr. Casale notes, there is a certain shift to back end of the transaction and even post contract signing. “Managers are realizing that the work begins after the contract is signed and it’s really all about governance and relationship management”, he says.

When companies have already decided to outsource, they have another challenge to face - where to outsource and whether to go offshore or not? Here are some tips suggested by the OI’s chairman.

- Bring in an advisor or just be very active within whatever networks you participate; another option is to do some research. “This will give you a sense of where you can find high value, high cost savings, and low risk options,” Mr Casale says.

- When choosing an offshore destination it’s necessary to determine the factors that are crucial for you and then to weight those factors: time zones, cultural compatibility, language, cost. You no longer have to go necessarily to India - there are alternatives like Eastern Europe or Latin America. Not only do you have cost savings there, but its closer proximity, less of a time zone issue, and a place more people are attracted to going every couple of months on a site visit.

- Don’t “put your eggs all in one basket. Most organizations are doing some things in India, some things in South America, and some things onshore”. If something goes wrong with one of your providers, then you have some other to rely on.

Source: blog.devongroup.com

Europe or North America – Who Will Spend More on Software Outsourcing?

2009-07-10T06:49:00.000-07:00

With anti-crisis plans adopted and the first shock and mess settling down, the ITO buyers and providers are back to daily work. In a challenging environment requirements and priorities change, and new trends surface. Most market players talk of increasing demand for nearhsore software development services in Western Europe, and stay generally optimistic about offshore outsourcing as an important element of the global economic equation.

According to the latest edition of global management consulting firm A.T. Kearney’s Global Services Location Index (GSLI), a ranking of the most attractive offshore destinations, the outsourcing landscape has changed worldwide as Europe already spends more on outsourced services than North America. North America has been regarded as the leading user of offshore services for many years.

Western Europe displays increased interest in using nearshore locations. One of the best options is engaging a software services provider with conveniently located software development centers in Central and Eastern Europe, a region most promising in terms of quality, stability, and costs.

Moreover, A.T. Kearney study reveals a rather optimistic forecast regarding the future of offshore outsourcing, stating that offshoring has become an integral part of the supply chain for the financial, banking,and IT sectors, and expects the industry to continue to grow over the long term.

Source: ITO News

Tune up for Business Growth, Guru Says

2009-06-15T01:58:00.000-07:00

The world’s trusted leader in IT research Gartner has recently given a reassuring outlook on the future of Information Technology business. The guru advisor doesn’t claim to predict dates for the economic recovery, but suggests that businesses already prepare their IT operations for the near upturn.

Despite that all of the leading economies (including US and UK) report recession and are cautious of any optimistic comments, Gartner analyzed the real market situation and revealed that many organizations are already working at near- or full-capacity levels. The research firm thus advises that IT enterprises should as early as possible prepare their business for an increased demand of IT services to be all fit and ready when the economy stabilizes.

“Waiting until that new demand arrives will be far too late to appropriately meet it, and we are recommending that companies start preparing for business growth now with a view to having these plans completed by July 1, 2009," noted Gartner analyst Ken McGee. "Having a completed plan will enable the near-immediate allocation of funding and staffing for IT projects, thus avoiding the need to take weeks to devise a plan after senior executives mandate the need to support business growth initiatives."

Not trying to speculate on the prompt end of recession, the analyst firm none-the-less advises that software vendors should not wait for an 'official' declaration, and shrewdly gear up for better times in advance to catch the fattest worm.

Source: InformationWeek

IT Outsourcing during Recession Time

2008-12-23T05:45:00.000-08:00

IT outsourcing providers are likely to grow their business in the economic slowdown, researchers have claimed. Analysis of US Department of Commerce data by Forrester Research found that the IT budgets of North American and European businesses are expected to increase by three per cent. Chief information officers are expected to focus on improving efficiency and helping to cut costs by increasing productivity, the report said.

"Sellers of communications equipment, software, and IT consulting and outsourcing services will see one or two quarters of declining revenues, but on average will still grow modestly in 2009," said Andrew Bartels, vice president at Forrester.

IT outsourcing firms are predicted to benefit from companies looking to reduce costs. "Whenever there's a downturn people outsource more, not less," says Gartner analyst Linda Cohen. "Organizations want to take costs out wherever they can. CFOs are pounding on their CIOs to just outsource it, just offshore it."

Source: ihotdesk

New Jersey's Fastest Growing Firms

2008-12-18T05:35:00.000-08:00

NJBIZ, state's weekly business journal, recently announced the fifty fastest growing companies. Companies were ranked based upon both dollar growth and percentage growth in revenues from 2005 through 2007.

EPAM Systems, Inc., an IT outsourcing leader with subs in Central and Eastern Europe, was ranked 5th on this year’s list. Founded and headquartered in Lawrenceville, EPAM made the New Jersey's Finest list for the 3rd consecutive year, showing sustainable business growth.

"We are proud to be among the winners of this prestigious award. EPAM's technology expertise and global presence that help companies outsource critical IT needs in a timely and cost-effective manner — in our case, worldwide — have served us, and our clients, well. Congratulations to all the winners! We are committed to continue bringing value to our clients, while growing EPAM Systems in this difficult business environment," stated Arkadiy Dobkin, EPAM President and CEO.

Source: epam.com

Innovation and Growth: The Software 500

2008-12-16T03:50:00.000-08:00

Innovations drive the software industry which has once again been proved by The Software 500, a revenue-based ranking of the world’s largest software and services suppliers targeting medium to large enterprises, their IT professionals, software developers and business managers involved in software and services purchasing. This year The Software 500 saw more than 100 new companies on the list for the first time, and the public/private company breakdown is 58% public and 42% private.

According to the results of the survey, the software industry continues to grow in total revenue, representing growth of 14.7% from the previous year ($451.8 billion in 2008 compared to $394 billion in 2007), while the total employee growth rate of 1.3% shows modest increase in comparison with 2007.

EPAM is proud to be named on the list (having advanced to the 190th place) along with 29 of its ISV clients, ranging from promising start-ups to global software leaders including three of the Top 10 honorees.

"We would like to congratulate our 29 ISV clients who made this year’s list. We extend our thanks for the opportunity we have enjoyed to grow together and to leverage each other’s strengths," commented Arkadiy Dobkin, EPAM’s President and CEO, noting: "We are also confident that many of our younger, but nevertheless innovative and fast growing clients will make the list in coming years."

Source: Softwaremag.com

Russian IT and Outsourcing Industry to Keep Growing

2008-12-01T01:28:00.000-08:00

According to “Russia IT and Outsourcing Industry Forecast to 2011”, a new research report by RNCOS, the Russian IT & outsourcing market has been growing at a rate of more than 20% since the past few years. Software spending has reported high growth rates; furthermore, it’s believed that it will continue to lead the growth patterns in the IT industry during 2008 to 2012.

The Russian software and services market will be mainly driven by the country's emergence as an IT Outsourcing (ITO) centre, thanks to its close proximity with Europe, similar time zone, and availability of high quality workforce at a competitive cost. The ITO market is undergoing phased transformation and is progressive from nascent stage to the development stage. Investments are also being phased in from both the government and private sector. The Russian government is increasing its IT investments in order to expand and develop the IT infrastructure in the country. Private sector investments are concentrated into opening of new software development centers in the country and also towards the expansion of the existing software development centers.

Source: RESEARCH AND MARKETS

IT will Survive the Economic Recession

2008-11-26T00:28:00.000-08:00

In one of its recent articles CIO Magazine listed the major reasons why technology industry will survive the economic recession. It looks quite comforting that despite all of the forecasts and instability, most IT industry experts are predicting that sales of software and services will be growing at a healthy clip again within the next 18 months.

IDC forecasts that instead of the 5.9 percent growth predicted prior to the financial crisis, the market will experience only a 2.6 percent increase in IT services outsourcing. Poland, Hungary, and Russia are listed among the countries with healthiest economies in Central and Eastern Europe, while the Middle East, Africa and Latin America are also catching up.

Furthermore, Forrester predicts IT outsourcing will grow around 5 percent in 2009 and 2010 as many companies will freeze new IT initiatives for the next three to six months and turn to IT outsourcing because it provides near-term cost reductions.

Similarly, Gartner's worst-case scenario for 2009 is that IT spending will increase 2.3 percent, according to a report released in mid-October. Overall, Gartner said global IT spending will reach $3.8 trillion in 2008, up from $3.15 trillion in 2007.

Source: CIO

Wealth Management Technologies in Russia

2008-10-29T05:36:00.000-07:00

In a report published by US financial management and advisory firm, Merrill Lynch, half of Europe’s millionaires are Russian and their number is growing twice as fast as the global rate. So with all this money is the Russian financial sector geared up for wealth management? Sergey Shelyagin, director at EPAM Systems, observes that although the Russian banks are quite keen to offer such services, overall, they noticeably yield to the longstanding experience, knowledge and efficiency of European banks in this sector (such as UBS and Credit Suisse).

Shelyagin, whose employer, EPAM Systems, assists banks and various financial institutions with the development of wealth management technologies, observes that the interest in wealth management in Russia manifests itself in a host of dedicated conferences and forums. The neighboring countries of Kazakhstan and Ukraine are also promising markets, as well as Belarus. Product development, software maintenance and support, and application testing are up to the word’s highest quality standards at these countries due to a well-established education system. ‘Unfortunately, it is hard to gauge this type of market, as it is quite closed and understandably reluctant to go public,’ says Shelyagin. ‘So, there is more speculation than fact.’

In terms of IT, Shelyagin observes that more and more wealth management organizations turn to the CRM systems that enable a holistic view of the customer’s capital structure and allow operating these funds more efficiently. The tendency with the CRM solutions is to acquire a third party system and then customize it under the entity’s own steam or outsource the customization to a specialist firm.

EPAM has experience in the field although the company is under obligation not to disclose the names of its wealth management customers. EPAM customized Pivotal CRM – a CRM product suite from a Canadian provider, CDC Software. ‘We changed about 50 per cent of the software, leaving the main engine – document flow – intact,’ says Shelyagin. ‘We also developed a portal application so that a client has access to his/her portfolio via a personalized window.’

Source: IBS Publishing

Financial Recession and Outsourcing: Who is in the Saddle?

2008-10-17T05:31:00.000-07:00

In one respect it has been a record couple of weeks for “outsourcing”. Around the world, governments and taxpayers have agreed to help ailing financial firms offload their toxic loans and resolve their liquidity worries. Banks are not the only ones hoping that this will help keep them afloat. The multi-billion-dollar outsourcing industry that runs computer systems and other things on companies’ behalf is keeping its fingers crossed, too. After all, financial giants have helped drive the industry’s stellar growth in the past few years. Now they threaten to undermine it.

But let’s look on the bright side as huge outsourcing deals involving banks are still being done, though the figures may be a bit lower compared to the previous year. Moreover, some outsourcing folk claim that the financial crisis could ultimately help their business, even though it threatens to harm it in the short term.

Furthermore, they say banking survivors that already use outside contractors will give them more to do as they cut costs. Banks that have hitherto shunned outsourcing will have to embrace it to protect their margins. And those with their own offshore activities will be more likely to turn them over to specialists.

Source:Economist.com

Forewarned is Forearmed

2008-10-09T05:09:00.000-07:00

“Forewarned is forearmed” is a golden rule of life. Outsourcing is no exception. If your outsourcing initiatives are successful or fail depends mostly on the way you perceive outsourcing and communicate with your outsourcing partner, In other words: set firm goals and keep your eyes wide open.

InfoWorld talked to industry experts to summarize their best advice, based on their own and their clients' experience. The interviewees were Larry Harding, founder and president of High Street Partners, a global consultancy that advises company on how to expand overseas; Steve Martin, a consultant and partner at Pace Harmon, half of whose business is focused on helping companies repair the damage from an outsourcing deal gone bad; Peter Geisheker, CEO of the Geisheker Group marketing firm; and Patrick Dolan, CEO of BPO Management Services.

Here are some of the pieces of advice shared by the experts:

1. Clear objectives. It's not that the best-laid plans often go astray; it's that they often aren't the best-laid plans in the first place.
There is a lack of experience in what outsourcing entails. Going global with a sales and marketing initiative, for example, has implications in finance as well as most of the company's other departments.

2. Compatibility. As the provider is going to become a part of your team be sure it’s compatible with your company’s culture, communication skills and working style.

3. Communication. Be very precise and detailed when explaining the project specifications. And as you are distributing IT functions outside the organization, be ready to coordinate and communicate with the customer all the time. You may even need to have an “ambassador” onsite just to see what is happening.

4. Expect to get what you pay for. If you put the outsourcer under too much cost pressure, it will cut corners too, such as using junior resources. Furthermore, never think of IT as a cost center; instead, consider it a value center. This will clarify what can be a candidate for outsourcing in the first place.

And never consider outsourcing as a means of saving corporate money and getting quality just for nothing - good execution flies out the window.

Source: InfoWorld

Russia Contributes to Hi Tech Future

2008-09-29T02:24:00.000-07:00

One of the criteria taken into account when choosing an outsourcing destination is governmental support in this country. In this respect Russia is becoming a tasty morsel: firstly, the creation of technoparks, then the increase of university places for students of technical branch of study, and now spending on technology-based research programs (about $25 billion) including the creation of two national research universities.

Prime Minister Vladimir Putin made this announcement as he spoke at a science and education conference. “We have never provided this sort of money for such purposes before,” Mr. Putin said. And as he stated the money would go toward various federal target Hi Tech programs from 2008-2010.

Putin also announced that a five-year program for basic research worth $10 billion had been approved, and that two national research universities would be created. “The successes of basic science do not provide the necessary dynamism and quality of applied research, and they in turn do not fully take into account the real needs of the economy,” Putin said.

Source: EETimes

The Economist Intelligence Unit Reveals IT industry Competitiveness Index

2008-09-25T05:42:00.000-07:00

According to a new study conducted by the Economist Intelligence Unit, the business information arm of The Economist Group, and sponsored by the Business Software Alliance (BSA), the United States continues to rank first in the annual global IT industry competitiveness index. However its score has gone down a bit compared to the previous year as many other countries are nipping at its heels.

The study assessed and compared the information technology industry environments of 66 economies to determine the extent to which they enable IT sector competitiveness. According to the Economist Intelligence Unit, six factors combine to create a sound environment for the IT sector, including: overall business environment, IT infrastructure, human capital, legal environment, research and development environment, and support for IT industry development.

Interesting to notice is that in this study Russia goes right after India and ranks higher than China.

Source: BSA

IT Services: Russia Excels. Part 2

2008-09-22T00:24:00.000-07:00

According to a recent study by French analytical company Pierre Audoin Consultants (PAC), the growth rate of Russian IT services market is a bit lower compared to IDC calculations and it wasn’t half as high as in 2006 and increased by 18% only (vs 47.2% according to IDC). However, PAC’s estimation of IT services market volume equals to that by IDC: approximately 3 billion euro or 4.4 billion dollars.

Nevertheless, PAC admits that even with 18% growth rate in 2007 Russian IT services market is the fastest growing in the world. Its growth surpasses IT services market growth rate in Western (6.6% in 2007) and even Eastern Europe (15% in 2007).

Local integrators who participated in IDC survey don’t question its correctness. “We share the opinion that our market shows robust growth”, assured Sergey Matsotsky, Chairman of the Board and General Director of the IBS Company. "Outrunning growth of this segment [IT services] is obvious”, confirmed his opinion Andrey Ageev, Technoserve A/S marketing department manager. He claims that the market will continue to grow at the rate of 20% annually in 3-5 years to come, especially taking into account underdevelopment of IT services sector in the Russian Federation compared to Western IT markets.

Sergey Matsotsky and CNews confirmed the possibility of IT services market growth: “IT services comprise more than 50% in the mature market, whereas lion's share of sales in emerging markets is hardware. This world experience shows that Russian IT services market has “the whole life ahead of it”. Although growth rate can decrease a bit in the short-term prospects due to current global financial fluctuations. Still, in the long-term plan the market can develop quite dynamically at the rate of 25-30% annually. Obviously, Russian economy demand for effective IT which secures competitiveness will increase”.

IDC forecasts that in 2009 IT services in Russia will reach 8 billion dollars and this segment will comprise 26%.

Source: CNews

IT Services: Russia Excels. Part 1

2008-09-18T06:03:00.000-07:00

According to IDC last year Russian IT services market showed robust growth and reached 4.4 billion dollars. As company analysts claim this growth rate is considered to be the highest in the world.

According to IDC’s classification IT services segment consists of systems integration (30.4% of the services market), consulting and custom application development (28.8%), hard- and software support and installation (18.7%), IT education and training (4.3%).

The largest IT services buyer is the financial sector (18.2%), governmental customers rank second (16.2%), and telecommunication companies are the third (13.1%).

The top 10 IT service providers according to IDC are IBS, Technoserve А/S, CROC, Optima, Lanit, CompuLink, I-Teco, HP, EPAM Systems and R-Style.

IDC states high growth rate three years in a row: in 2004 it increased by 26.3% to reach 1.9 billion dollars being the highest in Europe, and in 2006 the market reached 2.99 billion dollars with the increase by 23.2%.

Oil prices and the launch of large federal IT projects are among the main reasons of IT services segment growth in Russia according to Alexander Prochorov, analyst at IDC. Stable political situation and favorable investment climate foster IT market development as well.

Source: CNews

Europe Outsources for Quality

2008-09-08T02:22:00.000-07:00

A new study by Ernst & Young completed last month found that Europeans are becoming more open to outsourcing. Being one of the few research works analyzing Europe’s openness towards outsourcing, the study showed that outsourcing was being used by 70 per cent of the European firms surveyed.

The British are, however, likely to outsource only a few standard functions, while the French and Belgians are open to outsourcing a wide range of functions.

Also, compared to 70 per cent of respondents that had at least one outsourcing relationship, only 49 per cent of respondents cited cost savings and higher productivity (revenue earned per employee) as the advantage of outsourcing for their organization. About 33 per cent identified better quality through use of specialized skills.

“French companies attribute less importance to cost-saving benefits, with improvements in quality and strategic organization being the key advantages identified. Belgian companies are also strong proponents of the improved quality brought by outsourcing, while in the UK, quality considerations are rated on a par with cost savings,” the study said.

Source: The Economic Times

Outsource to Get Better Performance

2008-08-27T07:48:00.000-07:00

The first thing to come to mind when talking about outsourcing is cutting costs. Or at least it was so… One of the modern trends for outsourcing providers today is to deliver excellence and quality, and consequently businesses are increasingly outsourcing to improve their performance. As Allie Young, VP at Gartner, said the shift towards enhancing business through outsourcing is a sign of a "maturing market".

Buyers of IT outsourcing anticipate increasing its use over the next two years and 88 per cent of the organisations currently outsourcing expect moderate to high levels of outsourcing compared to 67 per cent in 2007".

About 85 per cent of Europe, the Middle East and Africa organisations expect to continue at the same level or increase their outsourcing during the next two years, up from 62 per cent in 2007".

Source: Silicon.com

Everest Reveals Q2 Trends in Outsourcing

2008-08-25T07:33:00.000-07:00

The Everest Research Institute’s Market Vista: Q2 2008 Report on global outsourcing and offshoring revealed that, despite the unstable economic conditions in the United States, the outsourcing market continues to stably grow with help from European investments. Europe accounted for 41% of all outsourcing contracts in the second quarter, signing 417 new outsourcing contracts (70% of which were ITO, 28% of which were BPO, and 2% of which were both ITO and BPO) with a contract value of $2.6 billion dollars. Similarly, the report demonstrated an increase in the use of the captive model, in which a company builds a captive offshore center to either eliminate the middleman (thus saving money) or to exercise total control over outsourced operations. Additionally, Everest, based on the Q2 report’s profiles of outsourcing activity in Central and South America, deducted that labor savings in Brazil, Chile, and Mexico, will not be realistic for the next five to ten years.

According to the Everest Q2 Report, the outsourcing market experienced a 3% growth in outsourcing contracts compared to the first quarter. This growth is largely attributed to Europe (particularly the UK, whose outsourcing activity has gathered incredible speed) where contracts were signed in the UK, Germany, Sweden, and Switzerland with manufacturing and telecom industries. Fifty four deals were made with financial services in the second quarter, with $240 in annual contract values; a marked increase was seen in the amount of these contracts signed by North American companies - 41% compared to 26% in the first quarter. The captive model, despite much negative speculation, is also growing in popularity; with 18 new set-ups and 3 divestitures, the 2008 total for captive offshore centers has totaled 34 set-ups and 6 divestitures.

Source: Everest Research Institute

European Outsourcing: current state of affairs and future trends

2008-08-20T02:03:00.000-07:00

TEAM International shared some findings of the latest Annual Outsourcing Survey conducted by Ernst & Young. The 2008 survey questioned more than 600 members of upper management in the largest European companies with a turnover of at least 100 million Euros. The survey came up with these findings:

• 70% of respondents reported outsourcing at least one business process to lower-cost countries;

• 49% of respondents agreed that offshore outsourcing served as an efficient cost saving tool;

• 33% pointed to better quality through hiring the specialists among the major reasons for outsourcing;

• At the industry level, the finance industry is reported to be the most mature in adopting outsourcing; banking is considered to be the most focused on IT and telecommunications outsourcing with a 75% take-up rate;

• Medium-sized companies and multinationals are the major users of offshore outsourcing;

• The majority of respondents generally report positive experience they have had with offshore outsourcing.

• 20% of European companies admitted intending to increase their outsourcing level within the next two years.

Source: Ernst and Young

IT Outsourcing on the Rise despite Global Economic Downturn

2008-08-11T06:18:00.000-07:00

The global economic downturn is placing pressure on more and more companies to cut costs and maximize profits, leading them to outsource IT functions. According to research from Gartner, the IT services market will continue to grow in 2008, with spending on IT functions estimated to increase by 9.5%, reaching $819 billion. The strength of the IT services market can be further exemplified by the decrease in profit warnings among UK IT software service providers; in the hardware and equipment sector, only twelve profit warnings were issued in the second quarter compared to the twenty in the first quarter. Outsourcing consultants claim that companies seeking to reduce expenditures (as a result of these unfavorable economic conditions) should not even consider reducing spending on projects that affect the operation of a business, such as outsourcing contracts and major IT implementations.

So far, IT service providers have been left unscathed from any IT budget cuts. It is highly unlikely for long-term projects to be postponed due to economic factors. Additionally, small businesses continue to increase spending on IT, hoping to increase business and decreases dependence on manual processes (thereby reducing labor costs).

In this period of economic downturn, purchasers looking to outsource are increasingly searching for value-oriented contracts, heading towards locations in the east, hoping to save big and to eliminate the need to transfer staff. Although India has traditionally been seen as the place to outsource, China, Morocco, and Hungary are rapidly growing in popularity. In fact, the twenty largest IT services suppliers in the UK opened 21 new global delivery centers in January 2007, with four set up in China, three in Eastern Europe, three in Morocco, and only two in India.

Seeing as we are in a downturn rather than recession, companies have the resources to outsource; it is an expense they are willing to invest in, knowing the future benefits and savings. When outsourcing, companies should find IT service providers capable of catering to their needs; the provider should have quality resources and tools to find a strategic solution to the company’s needs. Similarly, finding a provider with a skilled tech team and personnel capable of communicating with the company and listening to its demands is of utmost importance in developing a quality product.

Both vendor and customer should look at this economic downturn as an occasion to do business more rigorously.

Source: ComputerWeekly

Russian IT reports brilliant half-year

2008-08-04T05:50:00.000-07:00

Last fall, a study was conducted by Linex analysts that helped formulate the assumption that there will be a change of trend in the IT market: the IT market, which was experiencing a slow rate of growth, is hypothesized to undergo a period of rapid growth.

The results of monitoring the first quarter validated the forecast that the market will be experiencing a faster rate of growth. The services that were most in demand on the Russian IT market were network and system integration, IT consulting - including consulting and custom application development, and maintenance and support of software and hardware.

Comparing characteristics of IT business from the first half year in 2008 with its analogous period last year showed that network and system integration, despite all forecasting and predictions, will not give up its place as the leader in Russia’s IT.

According to Linex’ “Real IT Market - Q2 2008” report, the results of the second quarter, and first half-year as a whole, allow the following conclusions to be made:

• The forecast that the IT market will experience a change in growth rate was accurate. The rates of growth during the first half-year increased by 55%, resulting in a 23.6% increase in profit compared to the 15.3% increase of last year.

• The growth rate of the Russian IT market for 2008 will be closer to the rate of market growth in the second quarter (20.8%), than to its anomalous high growth temps in the first quarter (27.3%). The irregular first quarter growth can be attributed to a marked increase in spending by the government sector on IT.

• The highest rates of growth in the first half-year were from the IT Services segment - 34.7% (in the second quarter, 27.7%). IT Services have become the engine driving the whole Russian IT market.

The full report is available in Russian at http://www.linex.ru.

Russia: SAP obtained pass to work with government secrets

2008-07-29T06:58:00.000-07:00

SAP NetWeaver became the first foreign ERP-system, certified by the Defense Ministry to work with secret government information. Admission to data labeled "Secret" will become, for SAP, a pass to a segment of power structures, and, similarly, a pass to a wide range of government customers.

SAP NetWeaver 2004 Application Server received certification from Russia's Defense Ministry for fulfilling the security requirements that were necessary to work with secret information. Alexander Federov, director of SAP CIS product development, explained to CNews that it took eight months for the product to be certified. Taking into account the complexity of the product, the Ministry of Defense held additional certification tests, and personally supervised the steps taken by the Certification Body to certify SAP.

Fedorov went on to explain that obtaining this certification is the first step for SAP entry to the military-industrial complex. According to Fedorov, by receiving this certification, SAP can now be seriously considered as a technological platform for the creation of the enterprise management systems.

The Ministry of Defense was, of course, the biggest, potential customer for SAP. With such a large infrastructure, which contains hundreds and thousands of enterprises, it is no surprise that the Ministry of Defense needs a unified management system for the maintenance of business activities to be built. After receiving this certification, the Ministry of Defense can now truly consider SAP as a potential ERP supplier.

SAP NetWeaver 2004 Application Server is now able to design automated systems up to the "1B" (security) level, and can process information containing government secrets. According to SAP, the company's next step will be to get certification from the Ministry of Defense for its other products.

Market experts, as a whole, have a positive opinion about the certification of SAP. According to Vladislav Kochetkova, a "Finam" analyst, fulfilling security requirements to process secret information indicates that national security is not threatened by the use of SAP; world leaders can now improve the quality of governance in Russian power structures to effectively meet objectives and reduce costs. "SAP's ability to work with undisclosed information gives them the opportunity to work with security agencies, and gives them access to a wide range of government bodies, each of which, in varying degrees, works with classified data," says Kochetkova in an interview with CNews.

Russia to Enter Informational Society

2008-07-23T04:26:00.000-07:00

At one of the latest State Council sessions Russian President Dmitry Medvedev said that in 2007 Russia was among global top three custom software development locations (after India and China) in terms of deals value. He also noted that the infrastructural progress observed now paves the way for a transition to informational society.

In his turn Minister of Communications Igor Shchegolev suggested introducing tax concessions for local providers of software development services. He emphasized that some measures had already been taken but appeared to be not as effective as desired. According to Mr.Shchegolev, tax remissions will help lots of companies, especially small firms, make a step to the forefront and find their place at the market. He also added that at present national ICT industry still depends on foreign suppliers.

Moreover, Russian President suggested discharging those officials who are computer illiterate, launching internet educational centers, compensating students’ internet expenses, and introducing electronic copies of school record books and registers.

Source: CitCity

Eastern Europe Came to Stay

2008-07-21T00:00:00.000-07:00

In 2007, Europe saw a considerable increase in their outsourcing activities. Of about $12 billion in mega deals awarded globally in 2007, over two third (68 percent) were closed in Europe. The demand for offshoring among Western European countries rose by 50 percent from 2004 to 2006, with Eastern Europe being a favorite destination. McKinsey estimates that offshoring operations in Eastern Europe could triple, to more than 130,000 jobs, from 2005 to the end of 2008. Dell, IBM and Morgan Stanley in recent times have outsourced their operations to Eastern Europe. At present, Eastern Europe’s outsourcing business is approximately $2 billion, which is still not a big fraction of about $386 billion global market. However, according to Gartner Dataquest, the growth in Eastern Europe would exceed growth in the rest of the market over the next four years; the outsourcing business is expected to expand by nearly 30 percent in Eastern Europe by 2010, as compared to 25 percent for the global market. Eastern Europe’s software industry grew by 12.53 percent in 2006, and is expected to grow at a Compounded Annual Growth Rate (CAGR) of 10.87 percent until 2008.

Many CEE countries have already come up as compelling alternatives to traditionally established destinations for offshore software outsourcing. Poland, Hungary, and the Czech Republic have shown bright prospects in the IT outsourcing market segment, newer destinations in CEE, including Romania and Bulgaria, are upcoming too.

It is forecast that 2008 will be the biggest year for the expansion of IT-service delivery and outsourcing capabilities beyond India. This has already helped to open new markets in regions like CEE, which can offer long-term benefits to its clients. According to A.T. Kearney’s Global Services Location Index study, CEE countries continue to be popular among European companies that are seeking alternative locations for their IT and business-process outsourcing services. And it’s no wonder as this region offers an educated, multilingual labor force, talented professionals who are trained in key technologies, reliable IT infrastructure, moderate to low cost of labor and access to the greater EU. Its secondary educational system and technology-oriented higher education has made it a strong contender for software development, R&D and engineering services.

Source: Global Services magazine

Security Essential in IT Outsourcing

2008-07-10T04:09:00.000-07:00

Many companies ignore the security problems associated with IT outsourcing until it is too late, it has been claimed.

According to the Information Security Forum (ISF), IT outsourcing and offshoring are attractive because of their potential to cut costs and increase speed to market.

Simone Seth, author of a new report published by the group, said the long term success of the outsourcing project can be damaged by a lack of security expertise or poorly identified information risk.

"Failure to involve information risk managers at the start of a project and through its lifecycle increases the enterprise's exposure to risk," she continued, adding that this could constitute data theft, information leakage or disputes that may arise from questions of ownership of intellectual property.

Earlier this week, the Irish Sunday Business Post reported comments made by the PFH Technology Group, which claimed businesses of all sizes are now choosing to outsource their IT operations and requiring different approaches from their service providers.

Source:ihotdesk

EPAM Chairman and CEO Arkadiy Dobkin named Ernst & Young Entrepreneur Of The Year® 2008 award winner in New Jersey

2008-07-08T07:38:00.000-07:00

Arkadiy Dobkin, EPAM Founder, Chairman and CEO, was named winner of the Entrepreneur Of The Year®2008 award in New Jersey, Information Technology Consulting category, organized by Ernst & Young, a global leader in assurance, tax, transaction and advisory services.

According to Ernst & Young, the awards are given to entrepreneurs who demonstrate extraordinary success in the areas of innovation, financial performance and personal commitment to their businesses and communities. The awards nominees were evaluated by independent regional panels of judges who assessed contenders for each designated category by the following criteria: vision, leadership, achievement, and social responsibility reflected in the revenue growth, innovation, risk-taking, and personal commitment to the business and the community.

"Ernst & Young is pleased to honor outstanding business leaders such as Arkadiy Dobkin," said Keith Brownlie, Ernst & Young Entrepreneur Of The Year Program Director for New Jersey. "Winners of the Entrepreneur of The Year award build leading businesses and contribute a great deal to the communities around them. Their success helps our area grow stronger."

"I would like to thank EPAM co-founders, veterans, and all employees for their hard work and commitment to our common goal. This success can be attributed literally to everybody in the company, in North America and Europe, and I am happy and proud to be a part of this innovative and dedicated team," noted Arkadiy Dobkin, EPAM Chairman and CEO.

As a New Jersey award winner, Arkadiy Dobkin is now eligible for consideration for the Ernst & Young Entrepreneur of The Year 2008 national program. Award winners in several national categories, as well as the overall national Ernst & Young Entrepreneur Of The Year award winner, will be announced at the annual awards gala in Palm Springs, California on November 15, 2008. The awards are the culminating event of the Ernst & Young Strategic Growth Forum, the nation’s most prestigious gathering of high-growth, market-leading companies.