Excellent NearShoring Choice – Ukraine

The long-established popular offshoring location India is steadily yielding to more attractive NearShore hubs like Russia and Ukraine. Why is NearShoring becoming a preferred choice of outsourcing customers? Why does Central and Eastern Europe lure more IT projects and thrive on the global arena?

In our today’s article we’ll take a good look at Ukraine and scrutinize its outsourcing potential as an advantageous NearShoring option.

First and foremost, in terms of the growing volume of offshore software development, Ukraine’s outsourcing potential is rooted in its deep skilled talent pool. Due to its technical expertise, the country gets a serious competitive advantage on the global arena attracting more mission-critical software implementation projects and complex consulting engagements. Figures from the Ukrainian Hi-Tech Initiative, the country's outsourcing software development alliance, reveal Ukraine's outsourcing industry is estimated to have grown by 20% in 2010.

However, growing technical expertise and demand for developers has led to increasing labor costs. According to the European Business Association (EBA), the monthly earnings of IT specialists in Ukraine have risen by $300 to $1,500 since 2010. In 2005, a monthly pay was just $500. Although even considering the significant pay rise, Ukraine still remains far cheaper than most countries in Western Europe. The country's biggest asset remains in its educated young people, who are not easy to find elsewhere even for real big money. "Many speak English and are internet literate. Companies employ these youngsters, and that's why they thrive," noted Michael Borg-Hansen, who has worked as Danish Ambassador in Ukraine since 2009. "You have to be really resilient in business to make it here, but it's the same case in a lot of emerging economies."

Source: ComputerWeekly

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Tips for Successful Re-sourcing of IT Deals (Part II)

In our today’s post we continue to give tips for successful re-sourcing of IT deals:

6. Prepare for People Problems. The outsourcing deal you signed may limit your right to solicit and re-hire provider personnel or make it difficult for the new provider's employees to shadow or conduct other knowledge transfer work with the incumbent's people, says Andrews of Thompson & Knight.

7. Select the Right Silo. "Towers where an incumbent outsource provider has included labor, hardware and software as part of the service offering will be much more complex to transition to another service provider than that same tower being provided under a labor-only model," says Pace Harmon's Martin.

8. Calculate the Cost of Disruption. There will be a price to pay for moving the work to a new provider so figure out what it is before first. "Do your homework," Lepeak says. "Understand the risks, costs and the level and nature of the likely disruption, and weigh that against the benefits of the transition."

9. Master Multisourcing. Most of today's resourcing work involves a partial transfer of outsourced functions resulting in a multi-provider environment, says Andrews. Coordinating multiple providers takes time and effort. Andrews advises that new contracts address some of those challenges including cooperation among providers, customer consent and approval requirements, and common access or usage rights to software or other proprietary materials.

10. Make it Easier on Yourself Next Time. You've consulted the contract, calculated the costs, and made the decision to recomplete. When it comes time to sign on the dotted line with the new provider, apply what you've learned. "The outcome of a re-sourcing often depends on leverage," says Andrews. "Make sure you have some in the new contract."

Source: CIO

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Tips for Successful Re-sourcing of IT Deals (Part I)

Re-sourcing might seem a complicated process at first sight for most IT services customers, although it is not, unless you follow the expert advice provided by the best outsourcing consultants and outsourcing experts that we highlight in today’s post.

Re-sourcing – the process also known as "recompeting" a deal – means switching outsourcing providers or bringing work back in-house, and it’s quite a usual practice in business world, and businesses shouldn’t be afraid to switch providers if they feel unsatisfied with their current services.

A successful transition from one vendor to another requires cooperation between the two, and both sides should consider the following tips in order to succeed at the recompete:

1. Go Back In Time. "Remember why you outsourced in the first place," says Edward J. Hansen, partner in law firm Baker & McKenzie. "If the reasons to outsource are still relevant, then you should consider changing providers rather than abandoning the strategy."

2. Consider The Deal Lifecycle. "Contractually it is often easier – though not easy – to shift work from one provider to another at the end of a contract term rather than in mid-term when various penalties may be incurred," says Stan Lepeak, Director of Research in KPMG's Shared Services and Outsourcing Advisory group.

3. Consult Your Contract. "Your contract could include exclusivity provisions, minimum spend commitments, or rights of first offer or first refusal for the provider that contractually limit or prohibit resourcing," says Steve Martin, partner in outsourcing consultancy Pace Harmon.

4. Question Your Motivations. "I recommend spending the time to determine what is motivating the customer to pursue this path, and whether it may be possible to make the current relationship work," says Hansen of Baker & McKenzie. "It may be possible to reset the relationship, renegotiate the contract and avoid the operational risk of moving."

5. Question Your Outsourcer's Motivations. "If the service is bad, it may be an indication of an unprofitable deal for the supplier and they may be motivated to move away from it," Hansen says. "On the other hand, if you can have a good honest conversation about this, you may be able to renegotiate the deal and leave the services where they currently sit."

To be continued...

Source: CIO

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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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EPAM Chairman and CEO Arkadiy Dobkin named Ernst & Young Entrepreneur Of The Year® 2008 award winner in New Jersey

Arkadiy Dobkin, EPAM Founder, Chairman and CEO, was named winner of the Entrepreneur Of The Year®2008 award in New Jersey, Information Technology Consulting category, organized by Ernst & Young, a global leader in assurance, tax, transaction and advisory services.

According to Ernst & Young, the awards are given to entrepreneurs who demonstrate extraordinary success in the areas of innovation, financial performance and personal commitment to their businesses and communities. The awards nominees were evaluated by independent regional panels of judges who assessed contenders for each designated category by the following criteria: vision, leadership, achievement, and social responsibility reflected in the revenue growth, innovation, risk-taking, and personal commitment to the business and the community.

"Ernst & Young is pleased to honor outstanding business leaders such as Arkadiy Dobkin," said Keith Brownlie, Ernst & Young Entrepreneur Of The Year Program Director for New Jersey. "Winners of the Entrepreneur of The Year award build leading businesses and contribute a great deal to the communities around them. Their success helps our area grow stronger."

"I would like to thank EPAM co-founders, veterans, and all employees for their hard work and commitment to our common goal. This success can be attributed literally to everybody in the company, in North America and Europe, and I am happy and proud to be a part of this innovative and dedicated team," noted Arkadiy Dobkin, EPAM Chairman and CEO.

As a New Jersey award winner, Arkadiy Dobkin is now eligible for consideration for the Ernst & Young Entrepreneur of The Year 2008 national program. Award winners in several national categories, as well as the overall national Ernst & Young Entrepreneur Of The Year award winner, will be announced at the annual awards gala in Palm Springs, California on November 15, 2008. The awards are the culminating event of the Ernst & Young Strategic Growth Forum, the nation’s most prestigious gathering of high-growth, market-leading companies.

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EPAM acquires pass to stock exchanges

EPAM Systems has acquired the B2Bits Company, an IT consultant providing services to stock exchanges and brokers. A special Capital Markets Competency Center headed by B2Bits president has been set up at EPAM, which enables the company to expand the range of services provided for the financial sector clients.

The EPAM Systems Company, a software development outsourcing services provider, has announced to acquire a 100% stake in B2btis, a provider of solutions and consulting services to professional stock market players.

One of EPAM’s service lines is development of mission-critical business applications for the financial sector organizations. About 600 of the company’s 4,000 employees are engaged in corresponding projects. EPAM now covers the entire value chain from domain knowledge and process consulting through customized high-performance architecture as well as product and application development, maintenance and support, and testing software. Russia, Western Europe and the USA are among EPAM’s top target markets.

‘The acquisition proves EPAM Systems is seeking to expand the range of services provided and become a leading service provider for stock market’, - states Arkadiy Dobkin, president and CEO at EPAM Systems.

Services for the financial sector will be provided by a specialized Competency Center headed by Mark Bisker, B2Bits president, who has worked for more than 25-year for leading technology companies, such as Schwab Capital Markets and Lava Trading.

If the IT consulting market grew by 20% in 2007, the financial segment growth was at least 1.5-fold higher, experts say. Due to transaction with B2Bits, EPAM Systems pledges to intensify related operations on the Russian market. ‘The given market is sure to continue developing due to growing professionalism of local players, foreign companies’ expansion and competition intensification’, - says EPAM. ‘Consulting for financial organizations is in greater demand than on the market in general, as financial organization are far ahead in IT implementation as compared to other entities, - says Alexander Lyubinsky, CMO at ISG. – The easy money period has finished for the financial sector, so competitive advantages might be achieved only when using updated infocom technologies’.

...According to CNews Analytics, EPAM Systems’ consolidated revenue has grown by 37.7% in 2007.

Source: CNews

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Eastern European vendors in the ITO elite

Some key trends in the global ITO industry development were revealed with the announcement of this year’s Global Services 100 survey results. IT outsourcing evolves and current trends are more than positive for Eastern European outsourcing vendors that come to the global arena and prove as solid players that shall be taken seriously now. The findings of the study attest that Russian and Eastern European software development companies have joined the Big League of IT outsourcing services providers to compete with India-based recognized giants.

Over its 4-year history, the GS study has earned a reputation of a trusted source of global outsourcing information for ITO buyers which manifests the leading providers of business and technology services and reflects major trends of ITO market development. This year New Jersey based EPAM Systems with major development centers in Russia, Hungary, Belarus and Ukraine not only reconfirmed for the third time its leading position in the Eastern European market. EPAM also became the first and the sole software engineering services provider with development locations in Central and Eastern Europe that made the global Top 10 "Best Performing IT Services Providers" list, rated 8th overall. Recognition of an Eastern European outsourcing vendor alongside such established leaders as TCS, IBM, Infosys, etc. testifies to its demonstrated delivery capabilities, depth of the engineering talent and client satisfaction, which makes the achievement even more crucial for the whole region.

CEE (Russia, Central and Eastern European countries) could always boast excellent software engineering skills and a vast resource pool practicing creative approach to task solving and focusing on delivering the most complex IT solutions. Until recently customers from Western Europe and America would opt for India when it came to software services outsourcing. But with the region’s current maturing economies on the whole and sustainable growth in its IT industry in particular Western customers turn to accept Central/Eastern European and Russian software services companies as trustworthy outsourcing partners offering top quality services and deep technology expertise. Acknowledged by numerous expert surveys as distinctively strong in software engineering, Eastern Europe is now viewed as a lucrative offshore location. Whereas Forrester predicts 9 percent increase in the global demand for IT outsourcing services in 2008, Central/Estern Europe and Russia step to the forestage as a strong competitor to the today’s ITO services mainstream destinations.

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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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