SOA: Promising and Long Lasting Trend?

As Gartner notes, approximately half of all 2007 major projects in the world were made on SOA. According to analysts, 60% of organizations will adopt the approach, and by 2010 it will be used in 80% of new systems. IDC forecasts that corresponding software expenses will constitute 11 billion dollars.

Whereas 2007 was the year of pilot projects giving an opportunity to customers to test SOA efficiency when developing and using business applications, the year of 2008 will witness double increase in SOA-related expenditures and further development of the most successful projects as customers are willing to implement the technology into business processes.

Experts at SAP believe that SOA is a perfect option for companies that previously had to choose between standard ERP solutions and pricey custom ones. Still with all its advantages (flexibility in changing business processes, service security and reliability, cuts in operational IT costs) SOA is not a panacea for all technology integration problems a company may face.

Expert forecasts concerning SOA advancement in Russia are pretty optimistic. Up to 70% of projects will use SOA in 2008 and at least one of the reasons for this is that all the current middleware platforms some way or another already use SOA at present. Various verticals demand SOA implementation however only a few, Finance and Telecom, have mature enough IT processes and sufficient budgets to start off with SOA.

Forrester analysts expect leading software providers will spend the next couple of years on developing more dynamic applications with better support of cross-functional business processes. Although the demand for SOA is growing, they will have to find new ways to promote their business applications. Hopefully SOA will be a more promising and long lasting trend than all the previous technological tendencies as the focal point of SOA is business but not technologies.

Source: Cnews (in Russian)

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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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Want to Stay in the Game - Be Progressive!

A clear correlation between IT organizations that deliver IT services at a more strategic level to the business, and how businesses perceive their IT organizations was revealed in the research conducted by a UK based industry analyst Freeform Dynamics.

It says: “There is indeed such a thing as the ‘progressive’ IT organization”. For such organizations it is important to be delivering services to the business at a strategic level meaning taking into consideration what can be kept in-house and needs to be sourced; learning from the experiences of more progressive IT organizations; adopting new working practices and of course, being more than just a cost centre!

Moreover, the research provides a number of steps IT organizations can take to deliver a significantly higher level of service to the business:

- The IT organisation needs to get the basics right
- Create a common language between business and IT
- Establish a peer relationship between business and IT
- Work towards co-ordinated goals and objectives
- Manage IT as a business-driven portfolio
- Foster relationships with key IT suppliers.

The conclusion drawn by the research is “the more progressive IT organizations will be better placed to manage the ongoing integration process that will be required, and deliver appropriate services to the business as a result”.

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Russian Technical Power

At present in Russia and other CEE countries the growth of IT is quite impressive. According to some estimates the volume of Russian IT market in 2007 was between 11,9 and 17,6 billion dollars (source: CNews). And there are still opportunities for further growth as together with the government support Russia has a chance to become Global leader in the sphere of innovative hi-tech. That was forecast at the forum devoted to the Technological cooperation between USA and rapidly growing markets of BRIC (Brazil, Russia, India, and China) – "Russia, India and China – Our Partners in the New Global Economy" which took place in Boston.

Implementation of the government program of Technoparks development, the “Innovative Code of Laws" which is aimed at stimulating innovations, as well as creation of laws on copyright protection are some of the initiatives of the Russian legislative and executive branches which were highlighted at the forum. Besides, during the meetings with the representatives of the Massachusetts business community the start of Russian-American cooperation upon creating a new Technology University in Russia was discussed.

If at least 30% of the planned initiatives were implemented, Russia would have undisputable chances to become a global technology leader.

Source: Outsourcing-Russia

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Central and Eastern European IT Outsourcing Market Hits $3bln

According to the latest research, IT outsourcing market volume of CEE region hit $3 billion mark in 2007.

A number of IT associations and largest IT companies from 16 countries of the region were involved in the survey conducted in August 2007 - February 2008 by the Ukrainian Hi-Tech Initiative with the support of ITONews.eu news portal, Baltic Outsourcing Association (Lithuania), JNN Consult Ltd (Bulgaria) and Employers’ Association of the Software and Services Industry (Romania).

Now let’s take a closer look:
Among 16 examined countries, Ukraine, Romania, Hungary, Poland, and the Czech Republic occupied the leading positions in terms of market volume. These countries stand out for the scope of final IT products produced and delivered.

Ukraine, Romania, Belarus, Poland and Bulgaria took the lead in the number of IT companies. Central and Eastern European region now witnesses a thriving period when companies undergo intensive business development and experience both organic and non-organic growth. The interest to the region, thanks to its enormous ITO potential, is unlikely to fade yet another decade, analysts say. It attracts new clients by outstanding technical competencies and high professionalism of the experts, lower labor cost, and friendly legislation as well as by geographical vicinity and excellent nearshoring opportunities for customers based in Western Europe.

When calculating the number of IT professionals involved into IT services and software outsourcing, Poland, Ukraine, Romania, Hungary, and Bulgaria are singled out by the survey as having the greatest human resource pool.

Attempts were made to calculate also minimum and maximum annual cost per service of one IT professional for the end customer in each of the countries. The most "expensive" ones include Poland, Hungary, Romania, the Czech Republic, and Estonia.

Main indicators of IT Outsourcing industry development (market volume, number of ITO providers, number of IT professionals, cost of one professional for the end customer) take Central and Eastern Europe to the level of such global outsourcing centers as India, China, and Russia.

Source: ITONews.eu

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Offshoring: Today and Tomorrow

Plenty has changed in the field of offshore outsourcing, which has evolved from a little-used practice to a mature industry in less than a decade. And plenty of change lies ahead.

Here are some noticeable key developments in the global practice of offshoring.

Use of Collaborative Tools
Greater communication capability via the Internet was the initial driver of the offshoring trend, according to the Forrester report. With such remote networking techniques now coming into play, there is a movement away from manual and travel-intensive processes, according to cfo.com.

Discrepant India
On the one hand, India continues to lead the way as an offshore destination, ranking at the top of A.T. Kearney’s 2007 Global Services Location Index. But on the other hand, it is loosing its appeal. The reason U.S. companies went to India in the first place was to cut down on costs but over the past year the value of the dollar dropped notably in relation to the Indian rupee. Moreover, significant wage increases in India have further shaved the cost advantage.

Onshore and Nearshore
Offshore outsourcing companies are setting up their onshore development centers to be closer to clients in locations with better cultural and geographical compatibility.

Blended Contracts
As CIO Today says, clients will engage in blended contracts¬ – a combination of offshore, onshore and even local outsourcing.

Nipping at India’s Heals
Geographies are changing as the space matures. Behind India in the offshoring race is China, Latin America. Russia and eastern European countries are also in the game showing robust growth of IT services due to their high qualified human resource pool and the ability to accomplish complex creative software engineering tasks.

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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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