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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