Becoming a Preferred Outsourcing Destination

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

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Europeans Unhappy and Look Beyond India

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

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Central and Eastern European Software Engineering Conference Gains Momentum

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.

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ICT Sector as a Tool for Overcoming Crisis

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

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Upturn in IT Business, Forrester Predicts

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

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Survey: IT Development Budgets On the Rise

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

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Agile Outsourcing: Taking the Lead!

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

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It's Harvest Time in Central/Eastern Europe

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

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The OI’s Founder Comments on Outsourcing Transformations

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

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

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

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Tune up for Business Growth, Guru Says

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

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