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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