SAP CIS made the top 3 selling SAP units worldwide

This year SAP CIS made the top 3 selling SAP units worldwide,” - said Jovan Maryanovich, SAP CIS Managing Director, at SAP Effective Enterprise Resource Planning Forum in Almaty, Kazakhstan.

Although the US and Germany lead SAP’s sales of Enterprise Resource Planning (ERP) software, CIS made the top 3 selling SAP units in 2007 - reported Jovan Maryanovich, SAP CIS Managing Director. As it turned out the SAP’s share of enterprise applications market reached about 45% in the CIS, according to IDC and Gartner.

Jovan Maryanovich says SAP owns over 50% of ERP systems market in Kazakhstan and this achievement is quite remarkable. However KZ has still a long way to go till it catches up with the CIS sales leader Russia. According to IDC Russia analysts the sales of ERP solutions in KZ reached $14 million in 2006 (approximately $1 per head), compared to $30 million in Ukraine (approximately $0.65 per head) and to a colossal sum of $365.12 million in Russia (more than $2 per head) or $1 million per day. Interestingly enough is that the EPR prices in Kazakhstan and Russia are absolutely equal.

The major SAP’s competitor on both the CIS and world market of business applications is the Oracle Corporation. Elena Semenovskaya, Software Research Director at IDC, said in an interview to CNews.KZ that the highest local demand is for ERP Financials and Supply Chain Management applications produced by both competitors.

Source: CNews

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Demand for IT Outsourcing in Central and Eastern Europe is improving again

This week EquaTerra’s analysts published the results of their 3Q07 Pulse Surveys. Against the background discussions of 2008 outsourcing trends – whether the demand will go significantly up or drastically down – the EquaTerra’s findings look pretty optimistic.
Particularly, the survey revealed that demand for Information Technology (IT) outsourcing is improving and is especially strong in the Europe, Middle East and Asia (EMEA) markets.

The pick-up in outsourcing demand is strong across all major industries, and is occurring even as growth in many vertical markets, such as financial services, is challenged by a range of economic and demographic challenges.

Key trends identified in EquaTerra's 3Q07 Pulse Surveys include:

• Globalization of Outsourcing: The use of remote, lower cost offshore resources to deliver ITO and BPO services continued to grow during 3Q07. However, wage inflation in leading offshore markets like India and the falling value of the U.S. dollar negatively impacted margins of service providers with extensive offshore operations. This, coupled with changing buyer demands and the need for service providers to access talent with more diverse skills, further drove the expansion of delivery capabilities beyond the Indian market into locations like China, Central/South America and Central/Eastern Europe.

• Overall Outsourcing Demand Growth: 51 percent of EquaTerra advisors noted that demand for outsourcing services was up in 3Q07, and their outlook for 2008 was optimistic. Demand growth was strongest into the ITO market segment and in the EMEA market geography.

Stan Lepeak of EquaTerra noted: "The findings from our 3Q07 Pulse Surveys are generally positive in terms of the growth, maturation and globalization of both the ITO and BPO markets. While buyers still experience challenges with their outsourcing efforts, overall results have met or exceeded expectations, which has enabled outsourcing to become a commonplace tool that - regardless of broader economic and market conditions - buyers employ in an effort to improve their process delivery and reduce operating costs."

Supposedly Q4 results will add bright colors to the analysts’ sentiments, especially regarding software development outsourcing in Central/Eastern Europe and Russia.

Source:EquaTerra

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Russian and Ukrainian IT Services

A couple of months ago Goaleurope experts were scanning ITO market of Eastern Europe and now have summarized their findings and a few facts about the industry.

We have identified over 150 companies of various sizes, vertical mix, product and services mix. One certain observation that came out of our research is that the industry is highly fragmented. These companies together employed over 50 000 people and generated $12.5B in revenue.

Goaleurope suppose there is a lack of resources in the services sector in Russia. However we find the annual supply of graduates with IT and IT-related degrees sufficient for the internal market demand. Despite being almost 80% smaller by population, Russia produces the same 200,000 graduates capable of entering the IT sector as India, according to Microsoft Research, and 20 times more scientists per capita, according to Forrester (source: Add Russia to IT Favourites, Global Services, 2007).

As mergers and acquisitions have become a global trend, Russian ITO industry is no exception:

The company Verysell (10th on our list with $470M turnover and 500 employees in 2006) has raised $50M in 2007 from Renaissance pre-IPO fund, Mint Capital, RP Explorer Fund, and Steep Rock to acquire IT services companies in preparation for an IPO.

In 2007 Systematica has announced an acquisition of the system integrator TopS BI, which in 2006 employed 475 people and generated revenue of $96M.

In 2006 EPAM Systems (US-based company with origins and development centers in Belarus) acquired Vested Development Inc. (Moscow, Russia, 400 employees) to create the largest software development company in Eastern Europe.

By acquiring VDI, EPAM expanded its geographical reach and increased scalability to better satisfy increased demand in IT outsourcing. Belarus and Russia locate EPAM’s major development centers with over 3 500 employees on board. EPAM offers a broad line of software development outsourcing services in the region.

The official figures paint IT market in bright colours: the IT services market has grown by 23% to $3B, representing 20% of the total IT market. The largest service segment was IT consulting and software development, which accounted for over 30% of the total market. The top vertical markets included financial services (21%), telecommunications (15%) and manufacturing (11%).

Noteworthy are also Russian IT export growth rates. The country's IT export-oriented outsourcing industry grew up to $1.7 billion at present, with a $5.8 billion forecast by 2009 and $10 billion by 2010, says IDC.

Compared to Russia, with population of 143 million, Ukraine (population of 47 million) has seen a considerably smaller IT services market. According to IDC in 2006 IT services market was estimated at $192M, which is over 20% more than in the previous year. Installation and maintenance of equipment and software products constituted 51%, system integration - 25% and software development - 10% of the total market.

In their latest study entitled “Outsourcing Ukraine 2007: The Capital and The Provinces" Goaleurope noted: "Ukraine has undoubtedly become the most attractive outsourcing destination in Eastern Europe. With the second largest population after Russia, a legacy of Soviet science and success-hungry entrepreneurs, the country boasts the fastest-growing software development industry”.

Source: GoalEurope

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The Russians are coming! Why IT buyers are selecting Russian suppliers like EPAM

Five years ago, India was synonymous with IT offshoring. Today, that is not the case. IT buyers can find IT developers and engineers in every corner of the world.

Two areas are seriously challenging India's supremacy: China (position No. 2) and Russia (No. 3). Today, many IT outsourcing buyers are experienced offshore customers. They are going outside of India for specific skills they can't find there, in the US, or in Western Europe. And they want to mitigate risk by sending work to more than one locale and distribute their efforts in software outsourcing. Eastern Europe, Russia, and China have been the big beneficiaries.

According to the Russian Software Development Association (RUSSOFT), Russian outsourcers have enjoyed 40 percent annual growth since 2003; 2007 is on par to equal that growth spurt. EU and US-based IT outsourcing buyers are sending work to Russia because its suppliers have distinct advantages over both China and India. They include:

The ability to handle complex tasks. Anyone who grew up in the Sputnik era knows the former Soviet Union's emphasis on math and science. Today's for-export IT companies are enjoying that vaunted legacy. That's why Russian IT suppliers specialize in embedded software, mission-critical, complex applications, system engineering, multi-platform projects, and algorithmic work. Russian workers can tackle non-standard tasks essential for troubleshooting and new software product development. An educated labor force. Half of Russian students major in science and math. That's 20 percent more than in China and at least twice the amount in India, Japan, or the US. A deep talent pool. Today 1.3 million Russians have degrees in computer science or engineering, yet only 70,000 work in IT-related jobs. The deep pool will keep wages steady in the next 24 months. Compare this to India, where wages are going up by as much as 10 percent a year. A stable workforce. Attrition rates in India routinely stay in the high 20s. The IT industry average in Russia is eight percent. A March 2007 IDC white paper entitled "Russia As Offshore Software Development Location: Should You Consider This Your Next Move?" found respondents discovered "price alone is a poor decision criterion which must be balanced by other considerations, not the least of which is the stability of the relationship, i.e. the rate of staff turnover." Labor stability means there is no need to overstaff projects to protect against high attrition. This saves money in the long run. Speed-to-market for new product development. In today's intense global marketplace, companies have to stay agile if they are going to remain competitive. They have to feed the revenue cycle by thinking up and then bringing to market new products. The Russian's ability to handle complex projects has helped its outsourcing buyers reduce time-to-market of critical new products, which has helped their bottom lines more than the initial cost savings, according to the IDC study. Cost. Russian salaries remain much lower than their counterparts in the mainstream ITO destinations, let alone in Western Europe or the US. Geographic proximity. Russian's major IT centers, the ones whose residents have the greatest scientific knowledge, are three hours or less by air to any Western European capital, making Russian suppliers the natural choice for nearshoring opportunities. The time zone difference is more convenient for both EU and US buyers than India or China. Cultural affinity. The Russian culture, business ethics, and mindset are closer to the EU/US than their Asian competitors. The benefits of working with EPAM, CEE's and Russia's ITO leader Currently there are dozens of players in the rapidly maturing ITO market. EPAM Systems, which was established in 1993, is the leader for many reasons: Size, stability and scalability. Currently, EPAM is the largest software services supplier in Central and Eastern Europe by both revenue (estimated US $100 million in 2007) and head count (3,000 plus employees). Also, the company is one of the fastest growing firms in technology world and has been recognized among the Deloitte Fast 500 for six years in a row and by Software Magazine among the Top 10 fastest-growing software product and services companies in $30 and $100M revenue range category for 2007. Efficiency and Quality. EPAM demonstrates sustained excellence in software engineering outsourcing following the latest development and technology standards. It uses a proprietary SDLC management tool designed specifically for distributed development using RUP and Agile methodologies. EPAM customers rely on its extensive outsourcing experience of 20+ million hours of successfully completed projects gained since its foundation in 1993. Software vendor partnerships. One of the unique aspects of EPAM's delivery model is its close partnerships with major software vendors including Microsoft, SAP, BEA Systems, and Hyperion which EPAM serves as clients as well. "Such relationships are a sound competitive advantage which helps us bring cutting edge expertise to our corporate clients and help them to build complex, mission-critical applications based on the new, advanced technologies," says Arkadiy Dobkin, EPAM CEO and President. "Participation in actual new product development for the top software vendors in the world is an unbeatable, unique experience that prepares our teams ahead of the market." US headquarters. EPAM is a US corporation based in New Jersey, which means it is subject to western corporate and intellectual laws; this is important because it simplifies the contracting stage and provides the highest level of comfort to US and EU clients. Multiple jurisdictions. EPAM's buyers benefit from the company's global delivery offices in the US, UK, Germany, Hungary, Russia, Belarus, and Ukraine. Multiple locations also mitigate geopolitical risk. The company routes the work to the most appropriate spot based on technology skills and vertical industry expertise. Strong onsite presence. EPAM currently has about 80 employees in the US and 200+ within the EU who provide strong interface to the company's development offices in Eastern Europe. Marquee client roster. Some of the biggest names globally outsource to EPAM. They include Reuters, London Stock Exchange, Colgate-Palmolive, British Telecom William Hill, Empire and CareFirst BlueCross BlueShield, Schlumberger, Halliburton, SAP, BEA Systems, Microsoft, and Hyperion, to name a few. Today, IT buyers are developing a more sophisticated offshoring strategy. That's why they are turning to Russia in general and EPAM in particular to help them stay competitive in our global village. Lessons from the Outsourcing Journal: India is no longer synonymous with offshoring. While other countries still have not challenged India's hegemony, buyers today are sending work to other places to search for specific skills and to mitigate geopolitical risk. They are selecting Russian suppliers for the following reasons: 1. The ability to handle complex tasks 2. An educated workforce 3. A deep talent pool 4. A stable work force 5. Speed-to-market 6. Cost 7. Geographic proximity 8. Cultural affinity Buyers chose EPAM because of its: 1. Size, stability, and scalability 2. Efficiency and quality 3. Software vendor partnerships 4. US headquarters 5. Multiple jurisdictions 6. Strong onsite presence 7. Marquee clients Source: Outsourcing-Center.com

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