Russian IT and Outsourcing Industry to Keep Growing

According to “Russia IT and Outsourcing Industry Forecast to 2011”, a new research report by RNCOS, the Russian IT & outsourcing market has been growing at a rate of more than 20% since the past few years. Software spending has reported high growth rates; furthermore, it’s believed that it will continue to lead the growth patterns in the IT industry during 2008 to 2012.

The Russian software and services market will be mainly driven by the country's emergence as an IT Outsourcing (ITO) centre, thanks to its close proximity with Europe, similar time zone, and availability of high quality workforce at a competitive cost. The ITO market is undergoing phased transformation and is progressive from nascent stage to the development stage. Investments are also being phased in from both the government and private sector. The Russian government is increasing its IT investments in order to expand and develop the IT infrastructure in the country. Private sector investments are concentrated into opening of new software development centers in the country and also towards the expansion of the existing software development centers.

Source: RESEARCH AND MARKETS

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Russia Contributes to Hi Tech Future

One of the criteria taken into account when choosing an outsourcing destination is governmental support in this country. In this respect Russia is becoming a tasty morsel: firstly, the creation of technoparks, then the increase of university places for students of technical branch of study, and now spending on technology-based research programs (about $25 billion) including the creation of two national research universities.

Prime Minister Vladimir Putin made this announcement as he spoke at a science and education conference. “We have never provided this sort of money for such purposes before,” Mr. Putin said. And as he stated the money would go toward various federal target Hi Tech programs from 2008-2010.

Putin also announced that a five-year program for basic research worth $10 billion had been approved, and that two national research universities would be created. “The successes of basic science do not provide the necessary dynamism and quality of applied research, and they in turn do not fully take into account the real needs of the economy,” Putin said.

Source: EETimes

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When Business Meets IT: Software Development Summit 2008

In the outsourcing industry, where trust, reliability and credibility are a passport to success, establishing personal contacts during face-to-face meetings of customers and providers are essential. Quite a number of industry events which bring all its representatives together are held regularly all around the globe to facilitate discussions burning issues, experience sharing, and establishing new business relations.

The eighth annual Software Development Summit took place in St. Petersburg, Russia earlier this month. The focal point of the Summit was all the segments of software development industry combining export, internal market, licensed products, and IT outsourcing. Belarus, Russia, Germany, Italy, the USA, Finland, Ukraine, and many other countries delegated their representatives to the event. They all had a wonderful opportunity to present new projects done both for foreign and domestic companies, to discuss world business development tendencies. The problem of work force and its training was also given careful consideration to as qualification of company’s staff is one of the prerequisites for customer base expansion, reputation build-up, and market share enhancement in today’s highly competitive environment.

Among those who took the floor there was Peter Schumacher, the founder and president of Value Leadership Group who described the New Competitive Paradigm in the European IT services. One of the 4 strategic options for Russian offshore IT services firms presented by the speaker was developing alliance with India, which at the first glance seems quite an unusual scenario. Although there may be a couple of techniques Eastern Europe’s and Russia’s ITO providers could learn from them trying to combine their skills with India’s scope and scale.

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Russia in 2007: Turning Point. Part II: IT Industry Overview

Russian IT market has in recent years been the star performer in the region in terms of growth dynamics. According to Pawel Olszynka, Head IT&Telecoms analyst at PMR Research firm in 2000-2007 the share of IT services in the total IT spending increased from 9.5% to 28%. The total number of IT companies in Russia in 2007 was about 2,000 and the IT market in Russia was worth around $16.3bn. The Russian Ministry of IT and Communications is even more optimistic saying the market volume reached 17 bln USD in 2007.

The government also contributes to the development of IT sphere. Several dedicated institutes were created, technoparks are being constructed, special tax regime was introduced, various promotional events are held – all of these are aimed at supporting the expanding national IT industry. Another recent initiative: in early January 2008 the City Administration of St. Petersburg launched the Innovation Program to invest ten billion rubles into the development of the technology enterprises in Russia’s North-West in the coming four years. The primary spending will be geared towards funding of infrastructure projects, such as special economic zones, IT park, Science City in St.Petersburg suburb of Peterhof.

Taking into account the global shortage of skilled IT professionals, Russian authorities pay heed to the national education system. Russia continues to hold one of the top positions in the world in terms of tech training. Dozens of universities practice the educational methods of the ex-Soviet Union which are a time-proved and globally appreciated approach to raising quality engineers, mathematicians, physicist, software developers and other IT specialists. Their excellent theoretical background coupled with hands-on training, high analytical skills and problem-solving mindset make them capable of meeting the most complicated challenges and delivering comprehensive solutions. This is the most critical factor in securing a successful IT outsourcing relationship.

See also: Russia in 2007: Turning Point. Part I: Economic Overview

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Russian Software Exports to see 7% amplification by 2010

One of the world’s largest nations Russia keeps showing signs of full recovery from 1990-s financial crisis with impressive GDP growth rates in the last couple of years. This is to be accounted to Russia’s mature traditional industries, as well as innovative ones like software development for export (IT outsourcing). A recent report by market researchers at RNCOS entitled “Russia IT and Outsourcing Industry Forecast to 2011” states Russia is to maintain its leading position in the ITO market by surging its market share.

The scrupulous analysis provides all-round overview of the Russian ITO industry, its past and present day, IT spending, custom software development and box software solutions markets, perspectives and challenges for the country’s IT industry.

According to the report Russia has deservedly earned its spot among the most popular ITO destinations. Most important for IT outsourcing are its deep human resource pool and advantageous tax regime. These factors coupled with Russia’s far-famed intellectual potential support ITO industry health.

The Russians renowned globally for their creativity, autonomy, analytical thinking, and ability to solve complex tasks are valuable human capital for such industries as ITO which require huge intellectual investments. Russia in this respect scores high on the international arena and is a favorable offshore location. It attracts both foreign investors and buyers of software development outsourcing services who set up their offshore development centers in the country in cooperation with the local IT services vendors. Consequently, it fuels Russia’s IT industry’s further growth and fosters IT exports increase.

Geographical proximity to both European and Asian countries contribute to Russia’s attractiveness. With such geographic reach, time zones compatibilities resulting in easier communication and better services quality, Russian software vendors are more flexible and convenient partners than many of their competitors.

Stepping aside from oil industry, Russian governments have realized the bright perspectives of the domestic IT industry and have already taken measures to facilitate its growth. Their initiatives in legislation, taxation, and promotion of local companies abroad are fruitful for all parties and will drive to tangible results in the near future.

Forecast from RNCOS: the share of the Russian software exports will reach 10% of the global software outsourcing market by the end of 2010, which is a 7% increase from 2006, cementing the country’s place in the leading ITO trinity.


Source: RNCOS

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India to conquer Russia?

India’s largest software development and IT-consulting services provider Tata Consultancy Services (TCS) announced their plans to open an office in Moscow, Russia in March 2008. It will sell products and services of the company to the customers across the CIS and Russia (the former members of the USSR). According to TCS vice-president, Gabriel Rozman, they can enter the Russian market either by acquiring a local firm or independently.

With TSC entering the Russian IT market, the competition in systems integration, software deployment, IT consulting, and outsourcing, especially that of business processes, will sharpen.
Experts claim that by 2010 TCS may bite up to 10% of Russian IT services market pie.

Despite the boldness of these plans, the major Russian market players, with EPAM Systems among them, do not take them seriously. They believe that the Indians have slight chances of winning large contracts as they will not get the lobby in Russia similar to what they enjoy in the US or UK. Furthermore in order to succeed in this region, the Indians will have to buy a large local company: Until then, few companies will regard TCS as a serious competitor. Unlikely is also that they plan to launch a large development center in Russia. Taking into consideration today’s tough competition for well-qualified IT professionals between the local companies, TSC will perhaps hire a hundred developers at best.

Source: Kommersant (In Russian)

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Analysts Found Haven for Custom Application Development

Russia has become a haven for custom software development across the full range of application types, as well as custom R&D and design work, embedded systems development, specialized testing, software package integration and translation services. These particular skills, Gartner Group says, are highly available due to Russia's unique strengths, which it lists as follows: an elite university system; a highly skilled and ample workforce; an array of specialized expertise capable of solving large-scale, complex technical problems; and cost of labor advantage compared with the US and Western Europe.

As a result, Russia has expanded steadily over the last few years and is rapidly becoming a major destination for offshore software development and software testing. Belarus, Ukraine and Poland are among other emerging destinations in the CEE region that have been recently often cited as lucrative software outsourcing locations primarily due to strong government support of the IT sector and multiple tax incentives. Analysts predict that the region will have captured a 7 percent share of North American and Western European offshore services revenue by the end of 2007.

RUSSOFT, the nation's trade association of software development and IT services companies, lists companies such as Boeing, Alcatel, Reuters, London Stock Exchange and Siemens as examples of more than 250 global corporations active in Russia-based offshore software development.

"We are moving from the era of cheaper coding towards outsourcing of more complicated solutions related to core business," says President of RUSSOFT Valentin Makarov. "That's why Russia's acknowledged strong points such as high educational level and creativity are finding so many new opportunities."

According to RUSSOFT, Russia is ranked number three in the number of scientists and engineers per capita worldwide. That translates into a talent pool of over 4.7 million students, 50 percent of which are majoring in science, math, and computer sciences. And these students regularly win international programming contests. In the world's most prestigious competition, the Association of Computing Machinery (ACM) International Collegiate Programming Contest, for example, the country boasts several gold medals in the last few years.

"Russia is of great interest to American high-tech because of the superiority of its software engineers," says Dr. Deborah A. Palmieri, president of the Russian American Chamber of Commerce based in Denver, CO. "They have exceptional theoretical ability, which when coupled with American know-how, provides a dynamic combination."

Source: Tech-2008

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2008: seven new Russian techno parks to be launched

The first objects will start operating in Russian pilot techno parks in 2008, said Leonid Reiman, Russia’s Minister of Communications. He noted the infrastructure of the objects constructed is being actively developed and the first investment agreements are being signed.

The Ministry of Communications plans that in 2011 the output of seven pilot techno parks will amount to $4,7 bln, while the overall number of employees in the given techno parks might exceed 75 thousand.

Mr. Reiman said at the Global Investment Financial Forum in Moscow that the key mechanism of state support is currently revealed in co-funding the development of engineering, transport and other infrastructural items. Also this is going to give a serious boost to the Russian ITO industry. Currently this work is well under way.

Source: CNews

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Russia: A turning-point in IT outsourcing

In 2007 the majority of the large Russian companies have shown a trend towards more positive views to IT project outsourcing, state the market players. The understanding that in conditions of the fast-paced economy it would be logical to transfer some of the enterprise's non-core functions to an external professional service provider facilitates this trend.

According to some expert estimation, over the past year the Russian outsourcing market has narrowed the gap in growth rates between it and Europe more than twice. Russian outsourcing providers report that large domestic companies are becoming less prejudiced against the IT segment. As of now quite a few companies in Russia realize the financial benefits of enlisting help of the independent service providers. However it is particularly justified in such cases when the number and complexity of projects is increasing rapidly but there are no sufficient in-house resources for handling the work on their own. The customer gets immediate access to a team of professionals, which, should they decide to rely on their own resources, might take several years to staff. In conditions of the fast-paced economy, transferring the company's non-core operations to an external specialized service provider is more than beneficial.

According to an insider's view, the Russian IT outsourcing industry wins more and more confidence among the world's leading vendors, like IBM and HP, for example, in such services as application development and maintenance and support. Russia is a promising destination and the companies actively intensify their outsourcing activities in the region. Correspondence to the international quality and business standards such as CMMI and ISO is considered to be one of the decisive factors in selecting a service provider. These standards also help plan further ways for improving the IT services quality. Today the share of the outsourcing services in the total IT market does not exceed 2,5%. However the experts are confident the segment is going to expand. The number of projects, customers and, as a result, Russia's IT expertise level is augmented rapidly. The growth rates demonstrated by some of the Russian ISVs in 2007 indicate that the Russian outsourcing market's 50% increase reached in 2006 will be surpassed, state the CNews experts.

Source: Cnews.ru

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IT Services market buoyant in Russia

According to a recent research by Renaissance Capital, one of the largest financial and investment corporations in Russia, the IT services industry (IT consulting, software development, etc.) will be the fastest growing sector of the Russian IT market. Analysts expect the demand for IT services to grow by around 25 % in 2008 and 2009 compared to 20% growth in IT products demand for the same period. In general the growth rate if the global IT market have a bit slowed down and amount to 6.7% in 2007.

Russia is the second most rapidly growing IT markets in the world after India. Analysts from Troika Dialog suppose its annual growth rate will keep at 18.3% till 2010, whereas India will be ahead by minor 0.8%. These predictions were released at the November conference “Investment potential of Russian IT Companies” Conference organized by Vedomosti newspaper. IDC experts are also optimistic and say that Russian IT market will reach $27.6 billion by 2010.

Source: Vedomosti

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Russia’s tempting ITO opportunities

While India is still the mainstream IT outsourcing destination in absolute figures, it’s no longer the unconditional choice. It appears Russia is becoming increasingly seen as an alternative to India's dominance, says Karen Geldenhuys, newly-appointed MD of IT recruitment company Abacus Recruitment.

Geldenhuys says companies unwilling to invest all their IT outsourcing resources in one country, or who are simply looking for an alternative, are turning to Russia. … Russia boasts a growing number of IT outsourcers, offering anywhere between US$8 000 and US$14 000 for a programming job, according to the latest reports.

Geldenhuys says Russia is now parading its IT industry as a strong alternative in the outsourcing environment. "It is offering what it claims is top quality, cut-price programming, with the renowned Russian efficiency and a big pool of highly educated programmers."

Furthermore, reports show that income generated by exported Russian IT services were raised to US$450 million in 2004. “Not big in global terms – and certainly a drop in the proverbial ocean compared to India's US$20 billion industry – but it is certainly a definite trend upwards.”

"Russia is not a sleepy hollow. It … boasts expertise in a number of hi-tech areas, including aerospace. Additionally, the country's programmer population presents a strong front, boasting a 250 000-strong software engineering force – more scientists per capita than Britain, Germany, India and France.

“US companies seem to have taken note and have established R&D centres in Russia. Those making the move include Motorola, Siemens, Sun Microsystems and Intel,” she concludes.

Source: ITWeb

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Russian and Ukrainian IT Services

A couple of months ago Goaleurope experts were scanning ITO market of Eastern Europe and now have summarized their findings and a few facts about the industry.

We have identified over 150 companies of various sizes, vertical mix, product and services mix. One certain observation that came out of our research is that the industry is highly fragmented. These companies together employed over 50 000 people and generated $12.5B in revenue.

Goaleurope suppose there is a lack of resources in the services sector in Russia. However we find the annual supply of graduates with IT and IT-related degrees sufficient for the internal market demand. Despite being almost 80% smaller by population, Russia produces the same 200,000 graduates capable of entering the IT sector as India, according to Microsoft Research, and 20 times more scientists per capita, according to Forrester (source: Add Russia to IT Favourites, Global Services, 2007).

As mergers and acquisitions have become a global trend, Russian ITO industry is no exception:

The company Verysell (10th on our list with $470M turnover and 500 employees in 2006) has raised $50M in 2007 from Renaissance pre-IPO fund, Mint Capital, RP Explorer Fund, and Steep Rock to acquire IT services companies in preparation for an IPO.

In 2007 Systematica has announced an acquisition of the system integrator TopS BI, which in 2006 employed 475 people and generated revenue of $96M.

In 2006 EPAM Systems (US-based company with origins and development centers in Belarus) acquired Vested Development Inc. (Moscow, Russia, 400 employees) to create the largest software development company in Eastern Europe.

By acquiring VDI, EPAM expanded its geographical reach and increased scalability to better satisfy increased demand in IT outsourcing. Belarus and Russia locate EPAM’s major development centers with over 3 500 employees on board. EPAM offers a broad line of software development outsourcing services in the region.

The official figures paint IT market in bright colours: the IT services market has grown by 23% to $3B, representing 20% of the total IT market. The largest service segment was IT consulting and software development, which accounted for over 30% of the total market. The top vertical markets included financial services (21%), telecommunications (15%) and manufacturing (11%).

Noteworthy are also Russian IT export growth rates. The country's IT export-oriented outsourcing industry grew up to $1.7 billion at present, with a $5.8 billion forecast by 2009 and $10 billion by 2010, says IDC.

Compared to Russia, with population of 143 million, Ukraine (population of 47 million) has seen a considerably smaller IT services market. According to IDC in 2006 IT services market was estimated at $192M, which is over 20% more than in the previous year. Installation and maintenance of equipment and software products constituted 51%, system integration - 25% and software development - 10% of the total market.

In their latest study entitled “Outsourcing Ukraine 2007: The Capital and The Provinces" Goaleurope noted: "Ukraine has undoubtedly become the most attractive outsourcing destination in Eastern Europe. With the second largest population after Russia, a legacy of Soviet science and success-hungry entrepreneurs, the country boasts the fastest-growing software development industry”.

Source: GoalEurope

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The Russians are coming! Why IT buyers are selecting Russian suppliers like EPAM

Five years ago, India was synonymous with IT offshoring. Today, that is not the case. IT buyers can find IT developers and engineers in every corner of the world.

Two areas are seriously challenging India's supremacy: China (position No. 2) and Russia (No. 3). Today, many IT outsourcing buyers are experienced offshore customers. They are going outside of India for specific skills they can't find there, in the US, or in Western Europe. And they want to mitigate risk by sending work to more than one locale and distribute their efforts in software outsourcing. Eastern Europe, Russia, and China have been the big beneficiaries.

According to the Russian Software Development Association (RUSSOFT), Russian outsourcers have enjoyed 40 percent annual growth since 2003; 2007 is on par to equal that growth spurt. EU and US-based IT outsourcing buyers are sending work to Russia because its suppliers have distinct advantages over both China and India. They include:

The ability to handle complex tasks. Anyone who grew up in the Sputnik era knows the former Soviet Union's emphasis on math and science. Today's for-export IT companies are enjoying that vaunted legacy. That's why Russian IT suppliers specialize in embedded software, mission-critical, complex applications, system engineering, multi-platform projects, and algorithmic work. Russian workers can tackle non-standard tasks essential for troubleshooting and new software product development. An educated labor force. Half of Russian students major in science and math. That's 20 percent more than in China and at least twice the amount in India, Japan, or the US. A deep talent pool. Today 1.3 million Russians have degrees in computer science or engineering, yet only 70,000 work in IT-related jobs. The deep pool will keep wages steady in the next 24 months. Compare this to India, where wages are going up by as much as 10 percent a year. A stable workforce. Attrition rates in India routinely stay in the high 20s. The IT industry average in Russia is eight percent. A March 2007 IDC white paper entitled "Russia As Offshore Software Development Location: Should You Consider This Your Next Move?" found respondents discovered "price alone is a poor decision criterion which must be balanced by other considerations, not the least of which is the stability of the relationship, i.e. the rate of staff turnover." Labor stability means there is no need to overstaff projects to protect against high attrition. This saves money in the long run. Speed-to-market for new product development. In today's intense global marketplace, companies have to stay agile if they are going to remain competitive. They have to feed the revenue cycle by thinking up and then bringing to market new products. The Russian's ability to handle complex projects has helped its outsourcing buyers reduce time-to-market of critical new products, which has helped their bottom lines more than the initial cost savings, according to the IDC study. Cost. Russian salaries remain much lower than their counterparts in the mainstream ITO destinations, let alone in Western Europe or the US. Geographic proximity. Russian's major IT centers, the ones whose residents have the greatest scientific knowledge, are three hours or less by air to any Western European capital, making Russian suppliers the natural choice for nearshoring opportunities. The time zone difference is more convenient for both EU and US buyers than India or China. Cultural affinity. The Russian culture, business ethics, and mindset are closer to the EU/US than their Asian competitors. The benefits of working with EPAM, CEE's and Russia's ITO leader Currently there are dozens of players in the rapidly maturing ITO market. EPAM Systems, which was established in 1993, is the leader for many reasons: Size, stability and scalability. Currently, EPAM is the largest software services supplier in Central and Eastern Europe by both revenue (estimated US $100 million in 2007) and head count (3,000 plus employees). Also, the company is one of the fastest growing firms in technology world and has been recognized among the Deloitte Fast 500 for six years in a row and by Software Magazine among the Top 10 fastest-growing software product and services companies in $30 and $100M revenue range category for 2007. Efficiency and Quality. EPAM demonstrates sustained excellence in software engineering outsourcing following the latest development and technology standards. It uses a proprietary SDLC management tool designed specifically for distributed development using RUP and Agile methodologies. EPAM customers rely on its extensive outsourcing experience of 20+ million hours of successfully completed projects gained since its foundation in 1993. Software vendor partnerships. One of the unique aspects of EPAM's delivery model is its close partnerships with major software vendors including Microsoft, SAP, BEA Systems, and Hyperion which EPAM serves as clients as well. "Such relationships are a sound competitive advantage which helps us bring cutting edge expertise to our corporate clients and help them to build complex, mission-critical applications based on the new, advanced technologies," says Arkadiy Dobkin, EPAM CEO and President. "Participation in actual new product development for the top software vendors in the world is an unbeatable, unique experience that prepares our teams ahead of the market." US headquarters. EPAM is a US corporation based in New Jersey, which means it is subject to western corporate and intellectual laws; this is important because it simplifies the contracting stage and provides the highest level of comfort to US and EU clients. Multiple jurisdictions. EPAM's buyers benefit from the company's global delivery offices in the US, UK, Germany, Hungary, Russia, Belarus, and Ukraine. Multiple locations also mitigate geopolitical risk. The company routes the work to the most appropriate spot based on technology skills and vertical industry expertise. Strong onsite presence. EPAM currently has about 80 employees in the US and 200+ within the EU who provide strong interface to the company's development offices in Eastern Europe. Marquee client roster. Some of the biggest names globally outsource to EPAM. They include Reuters, London Stock Exchange, Colgate-Palmolive, British Telecom William Hill, Empire and CareFirst BlueCross BlueShield, Schlumberger, Halliburton, SAP, BEA Systems, Microsoft, and Hyperion, to name a few. Today, IT buyers are developing a more sophisticated offshoring strategy. That's why they are turning to Russia in general and EPAM in particular to help them stay competitive in our global village. Lessons from the Outsourcing Journal: India is no longer synonymous with offshoring. While other countries still have not challenged India's hegemony, buyers today are sending work to other places to search for specific skills and to mitigate geopolitical risk. They are selecting Russian suppliers for the following reasons: 1. The ability to handle complex tasks 2. An educated workforce 3. A deep talent pool 4. A stable work force 5. Speed-to-market 6. Cost 7. Geographic proximity 8. Cultural affinity Buyers chose EPAM because of its: 1. Size, stability, and scalability 2. Efficiency and quality 3. Software vendor partnerships 4. US headquarters 5. Multiple jurisdictions 6. Strong onsite presence 7. Marquee clients Source: Outsourcing-Center.com

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EPAM: Success Offshore and Nearshore

EPAM Systems (VARBusiness 500 # 281) embraces the global economy, maintaining a global headquarters in New Jersey, a European headquarters in Budapest, Hungary and a Russian headquarters in Moscow. This solutions provider delivers software product development, testing, maintenance and support services, as well as complex industry solutions, their customization and deployment to clients in more than 30 countries worldwide. EPAM's focus on solutions that provide cost-savings and high-end functionality drove this company's growth by 75 percent last year, resulting in revenue of more than $70 million. In an interview with CMP Channel, Arkadiy Dobkin, EPAM CEO and president, recently discussed how it conducts offshore and nearshore activity, as well as challenges it expects to face in the next six months.

EPAM's revenue was an impressive $70 million in 2006. What is your target for next year, and how do you aim to achieve it?

We plan to pass $100 million mark in 2007. In 2008, we expect to keep our company growth rate at 30 to 35 percent. However, the demand for quality software outsourcing services is very strong so there are good chances that we can do even better.

Offshoring and nearshoring, EPAM's core competencies, are hot topics these days. Explain why companies seem to be turning toward nearshoring. What are the advantages? How is offshoring evolving to meet the demands of today's customers?

EPAM's target markets include the USA, Western Europe, and Eastern Europe as well. We do offer both nearshore and offshore delivery capabilities in all those markets.

Nearshoring has some clear advantages mostly related to potentially more effective communication due to better time zones alignment, more opportunities for on-site visits, and better chances for cultural compatibility. Some clients prefer nearshoring for the most important and complex projects. The maturity of the company and its process to support global delivery model are often much more important than proximity to the client in most cases for large scale projects where formal practices should be in place in any case. Very often vendors offer a combined model where the project team is spread among multiple locations including on-site, nearshoring and offshoring locations for different roles and activities. That becomes more and more popular recently. And, there are many situations when pure offshoring model is very effective. We delivered many large mission critical applications with small (less than 5%) on-site presence and have some long-term relationships where our teams of hundreds people do work 100% from offshore locations.

What are some of the challenges facing companies that choose to outsource? Are those challenges different for those opting to nearsource? Please explain.

In my opinion, most challenges are very similar and practically the same any company would face in any outsourcing deal even by working with a vendor across the street.

Some potential advantages of nearshoring were mentioned [earlier], and those could be important in specific projects. I would still say that the general capabilities and expertise as well as specific matching skills and knowledge to the clients needs could be much more critical for the most projects than just a distance to the client location.

What are some important characteristics that define a successful customer relationship in terms of outsourcing?

Trust. When clients start to think about outsourcing as an extension of their own people and focus on how to use available capabilities of the vendor to achieve the final goal vs. being concerned mostly about "is that good to outsource or not."

Clearly, before attaining such a relationship, a lot of efforts should be invested from both sides.

What IT business trends do you see in the next six to 12 months?

A multi-sourcing trend. Outsourcing is no longer driven solely by cost reduction. Customers seek specific skills, best technologies and suitable delivery capabilities, and thus are looking for multiple vendors in multiple locations to provide the best possible match to what they need.

There has been a lot of merger and acquisition activity in the sector. Any plans to grow through acquisition, or will growth be organic only?

There are different goals to be achieved with M&As. Sometimes, it's to increase scalability, acquire very specific skills or better position the company to the target markets. So far, we have been successful in utilizing such an approach to achieve our goals. We would consider doing it again in case of finding a good match, but we have no firm plans yet.

By Jennifer Bosavage, CMP Channel
Source: Channel News

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