Overseas Businesses Stake on Offshoring

65% of businesses in the US, a way better half, send tech jobs offshore, according to an annual survey from Society of Information Management (SIM). The survey encompassed 275 US companies interviewing CIOs and senior IT leaders.

Even despite the sagging economy, companies aren't cutting IT budgets in 2012. The reason for this is that companies see IT as a valuable investment and businesses are trying to leverage IT to reduce costs instead of cutting IT to save money. In this respect, IT cost reduction becomes one of the least concerns of top management; the major – business alignment. The study revealed other IT priorities in business agility, business process management, strategic planning, reliability and efficiency, enterprise architecture, security and revenue-generating IT innovations.

The most in-demand services in offshore outsourcing are product and application development, application testing, and maintenance and support. Russia and Eastern Europe are among the most preferred emerging destinations, while India remains an established outsourcing spot for most US companies, followed by China and Latin America.

Source: ComputerWorld

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Outsourcing of IT Services in Capital Markets

Global financial services companies are aligning their IT strategies and priorities along with the developing market and business conditions.

According to a recent study from Everest Group on the trends and future outlook of IT outsourcing in Capital Markets, the volume of large-sized, active capital markets transactions grew four-fold from 2008 to 2010. A large part of such large capital markets deals are structured around application development, ongoing enhancements, and maintenance.

Everest Group stated the key imperatives for capital markets firms today as:

• Alleviating risk and complexity caused by uncertain global economic environment and wide scale regulatory reform;

• Managing trade volatility to streamline front-office operations and modernizing the clearing and settlement function in mid- and back-office;

• Building “region-specific” expertise to drive the global growth agenda, given that capital markets’ operations across geographies are facing disparate challenges.

In terms of offshore software development, Ukraine is positioned as an unrivaled best choice with regional market-specific expertise. Financial giant Barclays Capital, for example, opened its technology center in Kyiv in 2010 and sees Ukraine as a key strategic destination within its technology growth plans.

Source: Global Services

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Hunting for New Geographies: Tips for Successful Outsourcing

In the search of better conditions and opportunities, it is natural for enterprises to look for new unexplored destinations for business. In the previous decades, the choice was mainly driven by cost factors, where India and China appeared as evident leaders in the global outsourcing space. Times, as well as value considerations, change and cost criteria cede to a more important asset such as untapped potential, for which emerging areas are increasingly being sought after.

Cultural affinity, mature infrastructure, and language capabilities are just among the few factors driving the hunt for new destinations in outsourcing. Eastern Europe and Middle East are among the regions that are nowadays experiencing high nearshore demand from clients in the United States and Western European.

When moving to new areas, it’s essential to consider multiple factors to succeed. Below we suggest a couple of tips for successful outsourcing to emerging destinations:

• Local knowledge and understanding of specific contexts of each region is essential.

• Risk diversification is important. There needs to be a right balance between offshore, onshore, and nearshore activities.

• In the current scenario, economic stability in different regions is an important factor to be considered.

• And finally, scalability is another factor that becomes important in the long run. Estimate the demographic and IT potential of each region carefully in terms of scalability and growth.

Source: Global Services

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Gartner Forecasts Enterprise IT Spending to Reach $2.7 Trillion in 2012

Despite the global economic uncertainty, Gartner analysts anticipate that the worldwide enterprise IT spending will experience a 3.9% increase next year reaching the total of $2.7 trillion. Enterprises will continue to invest heavily in their IT infrastructure seeing it as the major drive of business growth.

Peter Sondergaard, Senior Vice President at Gartner and Global Head of Research, underlines the importance of IT: “The days when IT was the passive observer of the world are over. Global politics and the global economy are being shaped by IT. […] For example, this year 350 companies will each invest more than $1 billion in IT. They are doing this because IT impacts their business performance.”

An increase in the IT services demand, consequently, means more projects for IT vendors, where especially outsourcing services are increasingly sought after. Gartner particularly notes, that emerging markets will continue to get closer attention in the coming years, in particular rising economies. According to Gartner’s estimations, the emerging economies will account for $1.013 trillion in 2012 of the global IT spending of nearly $3.7 trillion. Considerably in demand are ASM & infrastructure services, software testing, and offshore software development. Russia, Ukraine, Poland, and Belarus are currently most promising outsourcing spots luring more and more international customers from Western Europe and the US.

Source: Global Services

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Untapped Opportunities in the Heart of Europe

Despite being one of Europe's most controversial countries, Belarus, favorably located between Western Europe and Russia, is among one of the IT leaders in Central and Eastern Europe providing unmatched ITO opportunities and having one of the biggest potential among CEE counterparts. IT outsourcing is one of the fastest-growing branches in the country and is one of the most robust segments in the country’s economy. Just consider one fact, for the first half of 2011 Belarusian IT companies have reported a 55% increase in their software and IT services export.

Having gained independence about twenty years ago, Belarus has rapidly grown and developed in the last years with all the values of the Western culture. And although it does retain some traits of the Eastern mind, the country is much West-oriented. Keen to cut costs, Western companies are increasingly seeking new destinations for outsourcing, and Belarus is a great opportunity nearshore which has a lot to offer in terms of tech skills.

Belarusian education is one of the strongest supporting factors. Every year, Belarusian universities graduate about 3,900 specialists with ICT and related technical skills. Because of the high quality of technical education, Belarus has the reputation of a country with a high scientific potential and an essential pool of IT talent. Belarusian software engineers undergo training in the training centers of IBM, Lotus, Sun, Novell, Microsoft, and other world IT leaders. In fact, when it comes to dealing with complex software development tasks, the ones who outshine all others are the developers from Belarus. Product development, software testing, and ASM & infrastructure services are among the strongest sides of the Belarusian IT sector.

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