Gartner Reveals Technology Predictions for 2011

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

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Western Europe’s Outsourcing Trends

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

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Outsourcing Market is Ramping Up Challenging Established Locations

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

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ITO Market Keeps Up Growth in the Third Quarter: Everest

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

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Introducing Multimodal Agenda for Software Testing

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

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The Nearshoring Choice of European Businesses

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

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Europe Embarks On the Outsourcing Spree

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

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Nordic ITO buyers’ satisfaction fuels market growth

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

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Europe Tops List of Safest Outsourcing Spots

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

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EquaTerra Takes the Pulse of European Outsourcing Market

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

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Top 10 Mobile Technologies to Watch in 2010/11

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

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2010 is the Year of Transition, Gartner Says

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

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R&D Partnerships Should Become More Strategic

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

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In-House or Outsourced IT Infrastructure?

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.

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Banks Find Tech Talent in Eastern Europe

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

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

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.

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Russia Information Technology Report Released

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

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

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

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EPAM Receives Preferred Supplier Status from Bosch Group

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.”

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European IT Outsourcing Trends: CEE Gains Momentum

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

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$50 Billion Saved Through Sourcing

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

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Software R&D globalization

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

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Vertical IT Spending to Go Upwards

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

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European IT Services Market Growth

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

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Healthy Growth of BI Market

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

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

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

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ITO Firms in CEE Prioritize Security of Clients’ Data

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."

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Happy Future for Outsourcing in 2010

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”

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New Horizons for Outsourcing

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

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EU Enlargement and Nearshoring

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

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Looking Eastern Direction: Russia's IT Landscape

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

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

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.”

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

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.

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

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.

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Indian Outsourcers Get Shivers As Local Rivals Push Up

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.

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