How to Leverage SAP Advantage for Your Development Needs

Taking into account the popularity of SAP products and solutions among advanced enterprises and the steadily increasing demand in SAP-based applications, obviously implementing SAP is a technology upgrade, but at the same time you may come across multiple blind spots when trying to sort through a gamut of SAP’s products and technologies. Whether an SAP customer or an SAP development partner, the first question that you’d have to raise is which technology or development language will best suit you and your company and what will be best option for your business needs. In our today’s post we’ll touch closer upon two programming languages – ABAP and Java – and will try to contradistinguish them: why choose one and why the other, for which needs, which has better future, etc. So, how to determine which language and technology is the best fit from all SAP’s offerings and is more likely to bring ROI? And how to leverage the strengths of these essentially complementary technologies?

In most cases, the choice rests on the project’s individual criteria and relevance of this or that technology for business needs. The first question to ask at the very beginning of the decision-making process is what you need and what is your particular demand in each specific situation – this is the main drive of choice. While on the one hand choosing the right platform, technology, and application depends on your specific needs, there are some considerations on the other hand that overlap and are relevant to any project, where the decision boils down to a kind of trade-off (e.g. fast development versus compelling user experience, or performance versus full-blown information display).

In the consideration of whether to implement ABAP or Java, the most important thing to understand is that it is not a choice of which technology is better, and there’s no simple algorithm that suggests you a better option. You need to understand, that SAP leverages the strengths of both the ABAP and Java programming languages in its technology platform, and clients may safely rely on either language for their development needs.

ABAP is SAP’s default programming language for both on-demand and on-premise business applications. It runs on SAP NetWeaver Application Server, which is robust and safe, and appears with an integrated development environment and a complete toolset that supports the whole life cycle. This is a definitive advantage, especially taking into account that support costs may constitute up to 60 percent of a business application’s costs. By choosing ABAP you may rely on highly scalable and reliable lifecycle management for the IT landscapes of large enterprises, as well as integrated source code management and tools to support installation of add-ons and upgrades.

At another point, Java is a widely-used programming language in the development community and is popular in many open source initiatives. SAP uses Java for integration topics, portal and integration solutions, collaborative scenarios and products, and many analytics solutions. Some of SAP’s Java-based products include SAP NetWeaver BPM, SAP NetWeaver Portal, SAP NetWeaver Composition Environment, and Sybase Unwired Platform.

Whether you opt for ABAP or Java (or you vote for a mixed solutions), you have to keep in mind that both play an important role in the SAP development portfolio and SAP promotes both languages. With this in mind, it doesn’t matter whether you implement a solution in ABAP or prefer model-driven development with SAP NetWeaver, you will definitely receive the highest levels of security, support, and comprehensive lifecycle management, because it confidently meets SAP standards.

Source: SAP Insider

Read more at EPAM Delivers Expert SAP Development Services for a Global Manufacturer

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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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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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Upturn in IT Business, Forrester Predicts

The analyst firm Forrester Research forecasts growing budgets and overall upturn in the IT business staring from the next quarter.

Andrew Bartels, analyst at Forrester and author of the report, inspires the industry vendors with optimism and gives an encouraging outlook for the approaching quarter. The report "US and Global IT Outlook: Q3 2009" speculates that the bottom of the IT tech market happened in the first and second quarters of this year. Analysis of that market is based on the sales of computers and peripheral equipment, communications equipment, software, IT consulting services, and IT outsourcing services.

The report further provides detailed branch statistics. Summarized, it reads as follows:

· the use of IT consulting services will increase by 11.7 percent in 2010;
· software purchases will be up by 9.3 percent;
· computer equipment sales will increase by 8.3 percent and communications equipment sales will show a bump at 3.6 percent;
· outsourcing will rise by 4.5 percent in 2010.

Bartels predicts that enterprise businesses will be the first to reinvest in IT and lead the revival of the tech boom.

Source: Redmond Developer News

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Survey: IT Development Budgets On the Rise

According to the latest IDC survey, IT development projects are on the rise in 2009.

With more than 6,000 respondents surveyed, there’s a pronounced tendency that IT budgets are increasing this year and the overall IT landscape looks more promising. Respondents were senior business leaders and software development professionals from independent software vendors, enterprises with more than 500 employees, SMEs, and other organizations for which software development was a key business focus or priority.

The major takeaways from the survey read:
• 38% of companies are outsourcing "some software development" to India, China, Ukraine and other Eastern European countries;
• 71% of respondents said new product or software development was a "top priority" for their organization;
• 51% of respondents said "saving money" was a top priority for their organization;
• 42% of respondents said agile methodologies were their software development models of choice,
• 36% of companies use Capability Maturity Model Integration as their process maturity and quality model;
• 62% of respondents focus their software development efforts on enterprise applications;
• 51% of respondents focus their software development efforts on Web-based applications;
• 42% of organizations execute software customization and integration in different systems and environments.

Rona Shuchat, director of Application Outsourcing Services at IDC, sums up: "During this economic recession, the competitive application outsourcing arena has become even more fierce as customers push for lower cost and improved operational efficiencies. Flexible, consistent delivery and management models, alongside scalability, reliability and high performance, will be critical as new hosting models become viable alternatives to the enterprise."

Source: Integration Developer News

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It's Harvest Time in Central/Eastern Europe

TEAM International is up with its latest summary of the Q1 2009 results for the CEE region. All in all, Central and Eastern Europe is positioned as an attractive IT offshore and nearshore outsourcing destination, with a number of bulleted conclusions and figures to support the finding. The major achievement is that there’s no doubt that CEE is no more a rising star, but a competent player in the software market.

Here are the other conclusions drawn as a result of thorough research works:

• More clients from Western Europe are choosing nearshoring IT functions to their less developed European neighbors rather than outsourcing to traditional Asian destinations. Organizations are no longer satisfied with just low-cost and are focusing on vendors’ competence, high-tech know-how and staff integration. CEE countries consistently execute high quality projects and have shown business and technical competence and cultural compatibility with customers from Western Europe and North America.

• The CEE region is ranked No 3-4 in the global marketplace in terms of the number of people involved in IT outsourcing and the value of provided services respectively.

• The CEE countries are notable for technology-oriented educational system and a solid Research & Development foundation.

• In 2008 CEE faced a small number of company closures and staff reduction (5-7% across the industry). In 2009 many new businesses and start-up projects boomed in the region.

Source: ITO News

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New Jersey's Fastest Growing Firms

NJBIZ, state's weekly business journal, recently announced the fifty fastest growing companies. Companies were ranked based upon both dollar growth and percentage growth in revenues from 2005 through 2007.

EPAM Systems, Inc., an IT outsourcing leader with subs in Central and Eastern Europe, was ranked 5th on this year’s list. Founded and headquartered in Lawrenceville, EPAM made the New Jersey's Finest list for the 3rd consecutive year, showing sustainable business growth.

"We are proud to be among the winners of this prestigious award. EPAM's technology expertise and global presence that help companies outsource critical IT needs in a timely and cost-effective manner — in our case, worldwide — have served us, and our clients, well. Congratulations to all the winners! We are committed to continue bringing value to our clients, while growing EPAM Systems in this difficult business environment," stated Arkadiy Dobkin, EPAM President and CEO.

Source: epam.com

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Innovation and Growth: The Software 500

Innovations drive the software industry which has once again been proved by The Software 500, a revenue-based ranking of the world’s largest software and services suppliers targeting medium to large enterprises, their IT professionals, software developers and business managers involved in software and services purchasing. This year The Software 500 saw more than 100 new companies on the list for the first time, and the public/private company breakdown is 58% public and 42% private.

According to the results of the survey, the software industry continues to grow in total revenue, representing growth of 14.7% from the previous year ($451.8 billion in 2008 compared to $394 billion in 2007), while the total employee growth rate of 1.3% shows modest increase in comparison with 2007.

EPAM is proud to be named on the list (having advanced to the 190th place) along with 29 of its ISV clients, ranging from promising start-ups to global software leaders including three of the Top 10 honorees.

"We would like to congratulate our 29 ISV clients who made this year’s list. We extend our thanks for the opportunity we have enjoyed to grow together and to leverage each other’s strengths," commented Arkadiy Dobkin, EPAM’s President and CEO, noting: "We are also confident that many of our younger, but nevertheless innovative and fast growing clients will make the list in coming years."

Source: Softwaremag.com

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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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IT will Survive the Economic Recession

In one of its recent articles CIO Magazine listed the major reasons why technology industry will survive the economic recession. It looks quite comforting that despite all of the forecasts and instability, most IT industry experts are predicting that sales of software and services will be growing at a healthy clip again within the next 18 months.

IDC forecasts that instead of the 5.9 percent growth predicted prior to the financial crisis, the market will experience only a 2.6 percent increase in IT services outsourcing. Poland, Hungary, and Russia are listed among the countries with healthiest economies in Central and Eastern Europe, while the Middle East, Africa and Latin America are also catching up.

Furthermore, Forrester predicts IT outsourcing will grow around 5 percent in 2009 and 2010 as many companies will freeze new IT initiatives for the next three to six months and turn to IT outsourcing because it provides near-term cost reductions.

Similarly, Gartner's worst-case scenario for 2009 is that IT spending will increase 2.3 percent, according to a report released in mid-October. Overall, Gartner said global IT spending will reach $3.8 trillion in 2008, up from $3.15 trillion in 2007.

Source: CIO

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Russia to Enter Informational Society

At one of the latest State Council sessions Russian President Dmitry Medvedev said that in 2007 Russia was among global top three custom software development locations (after India and China) in terms of deals value. He also noted that the infrastructural progress observed now paves the way for a transition to informational society.

In his turn Minister of Communications Igor Shchegolev suggested introducing tax concessions for local providers of software development services. He emphasized that some measures had already been taken but appeared to be not as effective as desired. According to Mr.Shchegolev, tax remissions will help lots of companies, especially small firms, make a step to the forefront and find their place at the market. He also added that at present national ICT industry still depends on foreign suppliers.

Moreover, Russian President suggested discharging those officials who are computer illiterate, launching internet educational centers, compensating students’ internet expenses, and introducing electronic copies of school record books and registers.

Source: CitCity

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Eastern Europe Came to Stay

In 2007, Europe saw a considerable increase in their outsourcing activities. Of about $12 billion in mega deals awarded globally in 2007, over two third (68 percent) were closed in Europe. The demand for offshoring among Western European countries rose by 50 percent from 2004 to 2006, with Eastern Europe being a favorite destination. McKinsey estimates that offshoring operations in Eastern Europe could triple, to more than 130,000 jobs, from 2005 to the end of 2008. Dell, IBM and Morgan Stanley in recent times have outsourced their operations to Eastern Europe. At present, Eastern Europe’s outsourcing business is approximately $2 billion, which is still not a big fraction of about $386 billion global market. However, according to Gartner Dataquest, the growth in Eastern Europe would exceed growth in the rest of the market over the next four years; the outsourcing business is expected to expand by nearly 30 percent in Eastern Europe by 2010, as compared to 25 percent for the global market. Eastern Europe’s software industry grew by 12.53 percent in 2006, and is expected to grow at a Compounded Annual Growth Rate (CAGR) of 10.87 percent until 2008.

Many CEE countries have already come up as compelling alternatives to traditionally established destinations for offshore software outsourcing. Poland, Hungary, and the Czech Republic have shown bright prospects in the IT outsourcing market segment, newer destinations in CEE, including Romania and Bulgaria, are upcoming too.

It is forecast that 2008 will be the biggest year for the expansion of IT-service delivery and outsourcing capabilities beyond India. This has already helped to open new markets in regions like CEE, which can offer long-term benefits to its clients. According to A.T. Kearney’s Global Services Location Index study, CEE countries continue to be popular among European companies that are seeking alternative locations for their IT and business-process outsourcing services. And it’s no wonder as this region offers an educated, multilingual labor force, talented professionals who are trained in key technologies, reliable IT infrastructure, moderate to low cost of labor and access to the greater EU. Its secondary educational system and technology-oriented higher education has made it a strong contender for software development, R&D and engineering services.

Source: Global Services magazine

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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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When America sneezes, India catches a cold

That saying could prove particularly true for India's IT and IT-enabled services (IT-ITES) industry, where the US accounts for the largest share — at over 50 percent — of the Indian software and outsourcing market.

During a recent media briefing, Kemal Dervis, administrator at the UN Development Programme (UNDP), said the US slowdown might make it difficult for India to sustain its economic growth rate of eight percent. It has already had some impact on the Indian market. The rupee has been strengthening against the dollar for over a year now causing worries for Indian exporters.

"The implications for all of India's externally linked sectors are significant," Rajagopalachari, executive director at PricewaterhouseCoopers India, said. "The strongest and most immediate impact will be on the IT-ITES sector."

Though Milan Shethan, Ernst & Young India partner in business advisory services, noted that, while the budgets of US-based companies will undoubtedly be cut, the services of Indian companies that are adding value will be retained. Only those companies that haven't performed may lose out.

Over the last 12 months, Indian companies have been diversifying their risks by increasing their focus on non-US markets, such as Europe; by undertaking labor-cost rationalization by getting rid of poor-performing workforces and tightening recruitment policies; by reducing the average age of their workforce in order to reduce cost and improve overall profitability.

Source: ZDNet

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Eastern Europe: The next silicon valley?

One key to driving healthier economies in the countries of Eastern Europe, particularly in the former Soviet republics, could be significant investments in Web 2.0 development. Could Eastern Europe foster its own Silicon Valley?

The Soviet Union had its own technology capital once, though you might be surprised to learn it wasn't located in the Russian Federation.

"Belarus was regarded as the 'Silicon Valley' of the former Soviet Union, manufacturing over 50 percent of the computers and components in the former USSR." said Sergei A. Rachkov, deputy permanent representative, Permanent Mission of the Republic of Belarus. "The country is able to provide expert services in application development and testing. Belarus’ software and IT services sector is one of the most successful and fastest growing industries in the country." Rachkov spoke on Wednesday before an audience at an UN conference in New York entitled, "The UN Meets Web 2.0 and ICT Entrepreneurs."

Although India's success story garners a lot of attention, countries in Eastern Europe are also turning to IT as a way to upgrade their economies. During the UN's Web 2.0 conference, representatives of Hungary, Belarus, and Croatia talked up government and private sector initiatives that have helped to lure the likes of Microsoft, IBM, Cisco and SAP to either outsource services from or set up shop on Eastern European turf.

Meanwhile, Rachkov said that, back in 2005, Belarus set up a High Technologies Park. Since then, about 40 domestic and foreign companies -- including software developers and exporters -- have become residents of the Park, Rachkov said.

Rachkov cited Belarus companies IBA Group and EPAM Systems as two of "the largest and most established European IT outsourcing providers based east of Germany." These and other companies in Belarus "have world-class project management infrastructure [and] certification, and [they] successfully serve world-renowned clients, including IBM, Colgate-Palmolive, Samsung, Siemens, Alcatel, British Telecom, Ford-Union, and Microsoft," according to the Belarusian official.

Source: BetaNews

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Ukraine to lure ITO buyers

With rich farmlands, a well-developed industrial base, highly trained labor, and a good education system, Ukraine has the potential to become a major Eastern European economy. According to The World Factbook of CIA the growth of GDP in 2007 was 6,9% which was fueled by high global prices for steel - Ukraine's top export - and by strong domestic consumption, spurred by rising living standard.

Economical stability is one of the key factors for ITO services buyers when choosing on offshore destination. as well as for ITO providers who plan new development centers launch. Currently Ukraine boasts the fastest-growing software development Industry in Eastern Europe. In its study Goaleurope, an Eastern European advisory firm, estimated the size of the outsourcing industry in Ukraine reached over US$246 million in 2006 and employed over 7,500 people, and the figures are increasing. With a number of definite advantages over India or China in terms of IT services and software engineering, Ukraine is increasingly becoming an attractive offshore IT outsourcing destination.

Firstly, government support and the support of different organizations play a critical role in offshore IT outsourcing. According to the online survey ”Offshore IT Outsourcing and Transition Economies” conducted by Business School of the University of East London several associations have supported software development firms in Ukraine, including an industry association (Ukrainian Association of Software Developers or UASWD) and a professional organization (IT Committee of the American Chamber of Commerce in Ukraine).

Secondly, the Ukrainian labor force has traditionally had significant software development skills with a very high level of language proficiency with English as the predominant foreign language.

Besides, the educational system is also well supported: multinational companies like Motorola, Hewlett-Packard and Dell have provided equipment and support for some of the country’s educational institutions. Motorola has also established its own direct investment software subsidiary within the country, and has publicly stated an intention to stay and grow in the Ukraine. In general, Ukrainian authorities regularly declare a keenness to encourage foreign investment.

The consultants at PriceWaterhouseCoopers described Ukraine as a country that ‘focuses on fostering closer integration with the rest of the world’. One of the government’s priorities is to join the WTO which is about to happen this year. As Director-General Pascal Lamy declared: “Ukraine’s WTO membership will… boost its growth and prosperity”.

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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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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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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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