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Swedish Mobile Apps Development Outsourcing

2011-04-08T09:17:00Z

Mobile Software Development Outsourcing in Sweden

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Swedish IT Outsourcing Intelligence Report 2011: Pre-Release Highlights

2011-03-31T14:37:00Z

We have recently closed our Swedish ITO survey, conducted in the frames of the All-European ITO research 2011. The survey was conducted online in February-March 2011 and completed by the 479 Swedish companies of different sizes and industry sectors. The ratio of outsourcing to non-outsourcing companies that took part in the survey was 41.8% to 55%.

The survey allowed benchmarking the following trends at the Swedish ITO market in 1Q 2011:

· 43.9% of Swedish companies have been outsourcing their IT and/or software development functions for more than 37 months

· Key drivers of corporate decisions to outsource in Sweden are: reduction of operating costs (up 33.5% from 2010), shortage of domestic IT skills and resources (up 33% from 2010) and necessity to focus on core competences such as product marketing, business development, infrastructure setup/upgrade etc (up 21.3% from 2010)

· The overall volume of the outsourced projects in Sweden has lessened over the past months with the €0-49K projects increasing by 34.9%, and the €500+K projects dropping by 7.2%, compared to 2010

· 28.9% of the companies surveyed use Offshore/Nearshore Dedicated Center model, which is down 23.5% from last year, while 34% of companies use Dedicated/Own Team model to engage with providers – up 14.7% from 2010. Fixed price projects are outsourced by 31.5% of companies, which is down 16% from last year

· 30% of companies transfer their SD/IT function(s) nearshore – up 3% from 2010; 25% of companies outsource within Sweden - up 5.3% from 2010, and 22.5% of outsourcers go offshore - down 2.5% from 2010

· Web 2.0 solutions remain most outsourced – by 60% of companies, followed by Enterprise and mobile areas of expertise that are outsourced by the equal numbers of companies – 29% each

· There is an increasing demand for cloudsourcing from the Swedish companies - up 13.1% from 2010

· Outsourcing is most adopted by the IT, software development and telecom companies – 40.5%, followed by mobile software development companies – 17.5% and iGambling providers and games studios – 9.5% of the entire representative sample

More thought-provoking findings will be available in the Swedish ITO Intelligence Report 2011 to be published in May 2011. The Report can be pre-ordered at http://www.itsourcing-europe.com/ITO_Knowledge_Center.html#swedish_report

Dutch Mobile Development Outsourcing

2011-03-16T15:17:00Z

 Mobile Development Outsourcing in the Netherlands        View more presentations from IT Sourcing Europe

IT Outsourcing in the Dutch Media and Digital Media Sectors

2011-03-16T15:06:00Z

 IT Outsourcing in the Dutch Media and Digital Media Sectors        View more presentations from IT Sourcing Europe

Challenges Facing Dutch IT Outsourcers in 2011 Revealed

2011-03-14T13:44:00Z

The Dutch IT Outsourcing (ITO) survey 2011 was conducted by IT Sourcing Europe in February 2011 in the frames of the All-European ITO research. The survey was completed by the 469 Dutch companies of different sizes and industry sectors. Forty-five percent of the survey participants admitted outsourcing their software development (SD) and/or some element(s) of the IT function nearshore, offshore or within the Netherlands, while fifty-five percent developed their software / IT solutions within own house.

The survey allows benchmarking the key ITO challenges facing Dutch companies in 2011. Top three challenges reported by the majority of the survey participants are: poor communication with vendors, their project managers and software developers (up 28% from 2010), poor quality of delivered software products and/or services (up 28% from 2010) and delays in delivery schedules and/or missed project milestones (up 23% from 2010). In 2010, one of the top three challenges was cultural difference, but it is no longer an issue in 2011, according to the survey. This finding can be explained by another survey finding that this year more Dutch IT outsourcers place their outsourced IT / software development operations nearshore (up 13% from 2010).

To respond to their major challenges, the vast majority of the Dutch IT outsourcers strive to increase face-to-face communication with their ITO partners (up 36% from 2010), dedicate more managerial resources (up 17% from 2010) and consider partnering with a different vendor (up 26% from 2010).

Another trend observed in the course of the survey is that in 2011 more Dutch companies, dissatisfied with their current ITO engagements / service delivery models, make a decision to back-source their operations in-house or to a nearshore/onshore ITO partner (up 4% from 2010). This finding suggests that the Dutch outsourcers become more demanding and challenge their ITO providers to be less process- and procedure-packaged, but more flexible and deliver on time and on budget.

More thought-provoking Dutch ITO challenges will be highlighted in the Dutch ITO Intelligence Report 2011.

New Research Reveals the 2011 Trends in the Dutch IT Outsourcing

2011-03-10T10:00:00Z

IT Sourcing Europe, a UK-based nearshore IT outsourcing (ITO) research and advisory company, has recently completed its Dutch ITO survey, conducted in the frames of the All-European ITO research 2011. The survey was conducted online in February 2011 and taken by the 469 Dutch companies of different sizes and industry sectors. Forty-five percent of the survey participants admitted outsourcing their software development (SD) and/or some element(s) of the IT function nearshore, offshore or within the Netherlands, while fifty-five percent developed their software / IT solutions within own house.

The major trends benchmarked in the course of the survey demonstrate that in 2011 the Dutch ITO landscape looks healthier and more mature compared to the 2010 indications.

Overall, more Dutch companies began to adopt the outsourced software development at the end of 2010 and beginning of 2011, according to the research. Currently, non-outsourcing companies outnumber those that outsource their SD/IT by only 3.6%, while in 2010 non-outsourcers outnumbered outsourcers by 26.8%.

Regarding the value of the outsourced projects, the following trends are observed in 2011 compared to 2010: the number of the €0-49K projects increased by almost 10%, the number of the €50-199K projects dropped by 4%, the number of the €200-499K projects dropped by 2% and the number of the €500+K projects dropped by 5%. The finding proves 2011 to be the year of smaller ITO contracts. It is partly explained by the increased demand for / more active use of the Cloudsourcing solutions by the Dutch ITO buyers - up 18.3% from 2010.

While in 2010 the vast majority of the outsourcing companies partnered with their service providers via the traditional Offshore/Nearshore Development Centers (O/NDC) or fixed price projects, in 2011 there are more Dutch companies that tend to run own dedicated / virtual teams located remotely to complete the projects (up 34% from 2010). This trend can be linked to another trend observed: in 2011 more Dutch companies from innovative lucrative niches such as mobile computing, casual games development, social media, 3D animation and augmented reality begin to adopt the outsourced application development (up 32% from 2010). Since most of these companies are innovative startups and/or venture capital funded companies, they strive to have as much managerial control of their projects as possible and predictable ITO agendas, which are hard to achieve when using DDC or Build-Operate-Transfer (BOT) models.

Overall, in 2010 the vast majority of the Dutch ITO buyers were somewhat satisfied with their ITO partners and service providers, while in 2011 the majority of outsourcers are very satisfied with their partners – up 20.4% from last year. On the other hand, the percentage of ITO buyers who are very dissatisfied with their ITO providers increased by 5.1% in 2011, compared to 2010.

More thought-provoking findings will be available in the Dutch ITO Intelligence Report 2011.

Smartsourcing Nearshore IT Resources for Mobile Software Development in Europe

2011-02-24T15:37:00Z

Over the past decade outsourcing has become a commodity practice used by different industries from ICT and media to healthcare and finance as a response tosuch challenges as a slow time to market, high cost of the in-house product development and maintenance, shortage of sufficient IT resources and others. The question “to outsource or not to outsource?” is no longer relevant in the presentday context. Today’s most relevant question is “how to become a disruptivecompetitor using outsourcing?”

When considering “traditional outsourcing” practices, service delivery models and destinations, it definitely makes sense for mobile software and / or content providers not to outsource their development, but keep it in-house. However, there are innovative ways to effectively use outsourcing for mobile development with minimal risks and “headaches”. While they are yet to be discovered by the vast majority of the Western European mobile market players, those who discover them first have a better chance of becoming fast paced mobile software innovators and staying ahead of competition in the years to come.

IT Sourcing Europe’s new white paper aims to demonstrate on real-life examples:

How utilization of nearshore IT resources and smart and innovative approaches towards outsourcing can help Western European companies, focused on rapid growth and long-term benefits, achieve both apparent cost savings and flexibility, and
How nearshore IT resources can effectively be integrated into mobile software company’s culture, mission and business objectives.

The white paper can be downloaded here

Government Cuts to Drive Investment in Cloud and Outsourcing

2011-02-18T10:08:00Z

Cloud computing will become increasingly popular with government IT departments during 2011 as funding cuts start to bite, according to analyst firm Ovum.

In a report entitled 2011 Trends to Watch: Government Technology, analyst Jessica Hawkins predicts that consumption-based technologies that are delivered through the cloud will grow in use due to the cost-savings they can offer.

"Because cloud delivery means a lot of infrastructure is owned and operated by vendors and because payment is based on what you use, rather than just a flat-rate payment, it gives government departments the chance to make significant savings," Hawkins said.

"As such the cut-backs being imposed could actually have a bit of a benefit as they will force government IT departments to look into these new technologies, which can offer something that has more relevance to workers and users than current systems in use."

She added that moving to the cloud could also help departments reduce inefficiencies and waste by ensuring that they only run services that they need.

Hawkins conceded that some government IT leaders remain worried about security and privacy with cloud-based applications and networks, but said that the opening up of a government-wide network could overcome this.

"Because there will be compliance guidelines that departments will have to conform to in order to share their data across the network this might allay any fears that staff have over using this sort of technology," she said.

Source: ITONews.Eu

IT heads admit they are not spending enough on innovation

2011-02-14T16:24:00Z

IT decision makers admit they need to refocus IT budgets toward innovation in order to improve business performance.

According to a study conducted by SAP among almost 500 senior IT staff in eight countries across Europe, the Middle East and Africa, a key issue was the division of expenditure among three areas - operations, maintenance and innovation.

A third of companies said that their current IT strategy is too focused on “simply keeping the lights on” in the day-to-day running of existing IT systems.

Overall, 60 percent of companies said that this IT strategy has "held them back" from investing in innovation. Respondents indicated that they face a wide range of issues that currently prevent them from investing in technology.

The most commonly cited reason was uncertainty about the economy, with 48 percent of respondents believing this was a barrier. In addition, 39 percent stated that too much money is spent on operations at the moment, therefore leaving a deficit in the budget that could otherwise be directed towards innovation.

The detrimental effect was also viewed as impacting competitiveness, with 38 percent of respondents stating the current spend priorities harmed their competitive position.

A lack of spend on IT innovation is having a negative business impact, with 44 percent of respondents saying it has directly resulted in a lack of productivity.

In addition, 43 percent also claimed to have lost potential cost savings because of the spend deficit. Also, over half of the companies surveyed believed they would get greater business value if more was spent on IT innovation.

“Our research has confirmed that companies continue to spend more of their IT budgets on operations than on IT innovation,” said Chris McClain, senior vice president of EMEA and India, SAP Premier Customer Network. “SAP is working with customers to help them lower their TCO to apply resources toward the innovation that will give them the advantages to grow their businesses."

The survey comprised of 487 interviews with IT decision makers across the UK, Russia, Germany, UAE, France, Saudi Arabia, Italy and Qatar.

Source: Computer World UK

European IT Outsourcing Survey 2011 Launched

2011-01-31T14:17:00Z

IT Sourcing Europe, a UK-based nearshore IT outsourcing (ITO) market research and consultancy agency, has started today its 2011 European ITO research. In the course of the research nine Western European and Nordic countries will be surveyed in terms of current level of ITO adoption, outsourcing behaviors, trends, challenges and problem solving practices. Additionally, European companies that do not outsource their IT function and develop their IT/software products within own house will be surveyed to measure their current readiness to involve in the outsourcing operations.

Overall, the 2011 survey aims to:

explore factors that drive Western European companies to outsource their software development / IT function, challenges associated with offshore/nearshore outsourcing and problem solving practices;
benchmark the European IT outsourcing demand in 2011;
find out which practice works best with the outsourced software development;
study factors keeping European companies away from ITO etc.

All survey participants will receive two complementary incentives for sharing their outsourcing experience / general attitudes towards ITO:

“Central and Eastern European ITO Landscape Report 2011”, and
Country-specific survey results

Last year, 3,334 Western European and Nordic companies participated in IT Sourcing Europe’s surveys. We expect to have more survey participants this year, as more companies understand the importance of sharing outsourcing experience and knowledge with a broader business community in Europe. The survey will be permanently live at https://www.surveymonkey.com/s/itosurvey2011

European IT Outsourcing Priorities of 2010 Reviewed

2011-01-04T14:35:00Z

According to the Gartner’s 2010 European Outsourcing and IT Services Priorities Survey, the end of 2010 could signal the end of slow growth and a return to real economic growth — or the onset of the next financial crisis. Regardless of the future direction of the economy, European businesses and their service providers need to optimize their outsourced environments, while increasingly adopting industrialized IT services in order to reduce nondiscretionary IT spending, to better align IT to the business and to better support growth initiatives. In 2010, unlike the previous years, outsourcing became of great interest to not only large organizations, but companies of all sizes, from SMEs to startups, and IT budgets of various magnitudes. For example, 14.7% of organizations with IT budgets of less than €1 million expressed interest in outsourcing, which compares with only 6.1% of organizations in this category in 2009. While conducting its Pan-European IT outsourcing study 2010, IT Sourcing Europe surveyed 1,557 companies with any type of IT outsourcing experience and was surprised to find that 86% of these companies were small to mid-sized (i.e. 1 to 500 in headcount and with IT budgets far less than €1 million).

In 2010 the pressure on capital and IT operating expenditure was still strong, and organizations expected providers to deliver further cost reductions. Although 53% said that they would outsource more and 40% said they would increase the external share of their budget, only 24% said that they would increase the budget for providers, according to Gartner. Almost a quarter of organizations expected their IT services budget to continue to decrease, while only 9.5% believed they would reduce their external IT services spending by 2011.

In 2010 European organizations increasingly focused on comparing external and internal service offerings. Gartner’s survey results say that the percentage of organizations spending 25% to 50% of their IT budget on external service providers was almost stable in 1Q 2010 - 26.2%. The number of organizations outsourcing less than 25% was down by two percentage points (from 45.9% to 43.9%), while there was an increase in organizations spending more than 50% of their IT budget externally (up to 29.8%). Regarding the volume of the outsourced software development, IT Sourcing Europe’s survey findings show that 57.2% of Western European IT services buyers outsourced less than 60% of their entire software development function, while only 19% outsourced 90% to 100% of their software development. This finding demonstrates that in 2010 companies were still afraid of transferring their software development in its entirety (i.e. core end-to-end development) to the 3d party.

While cost cutting was CEOs’ first priority in 2009, it became CEOs' fifth priority in 2010, Gartner says. In 2010, the top priorities were customer retention/attraction, competitiveness and attracting/retaining talent. As per IT Sourcing Europe’s survey, the top three outsourcing priorities in 2010 were cost reduction, time-to-market acceleration and access to qualified IT resources/skills that are hard to find within homelands. As seen from these findings, cost pressures continued unabated in 2010, while requirements for access to resources and capabilities, flexibility and scalability increased. This means that 2011 is bringing sourcing strategists in Europe a more complex set of business requirements that are not easy to address.

To conclude with, in 2011 service providers will need to compete against increased competition from services based on alternative delivery models (e.g., own / virtual software teams, services consolidation etc) and from niche and potentially disruptive players in order to address client organizations' changing priorities and requirements. To do so, providers must focus delivery toward clients' mature outsourcing requirements (governance, intimate relationship and customized service, quality of services, responsiveness and innovation) and their new industrialized service requirements of high flexibility and good quality at a low price.

Ukraine Doubles Its IT Services Export in 2010

2010-12-30T13:31:00Z

Ukraine's exports of computer software will reach 1 billion USD in 2010, the country's Vice Prime Minister Serhiy Tyhypko announced today. Ukraine is the world's fifth biggest IT services exporter and this figure is doubling every year, making IT the fastest growing export-oriented sector of the country.

"The steel export totals 2.8 billion USD, the export of agricultural products is up at 9.5 billion USD, and chemical products export reached 3.5 billion USD. And the export of software products is worth 1 billion USD. Moreover, the inflow doubles each year," said the Vice Prime Minister of Ukraine.

According to the "Central and Eastern Europe IT Outsourcing Review 2010", 14,000 IT specialists graduate from Ukrainian universities each year. As stated in the report, Romania led in the annual growth in the number of IT specialists with 12.33%. Ukraine took the second position in the region with the 9.5% growth. Ukraine also stood out with the highest outsourcing market volume in Europe of estimated 700 million USD, in 2009.

Ukraine continues to hold the 4th position in the world in the number of IT specialists, following the USA, India and Russia. On top of that, the experts recognize both quantitative and qualitative potential of the Ukrainian specialists.

(SOURCE: Worldwide News Ukraine)

2011 European IT Outsourcing Predictions and Expectations

2010-12-22T14:22:00Z

IT Sourcing Europe presents its forecasts on the 2011 state of affairs in the European IT outsourcing market.

Judging from the perspective of IT outsourcing (ITO) services buyers, the following trends and changes are anticipated in 2011:

1) An increased demand for outsourced IT services from the public sector.

In 1Q 2010, public sector contracts awarded across EMEA stood at over €9 billion and are expected to increase in 2011. In the UK alone, public sector gained a 75% share in the nation’s outsourcing spending, which accounted for 86% of EMEA public sector expenditure in 2010. It is expected that the demand to explore and utilize outsourcing opportunities in Europe will increase due to recent turmoil in such countries as Ireland and Greece as well as economic uncertainties in other EU member states. Governments of economically slow achieving countries will most likely help promote outsourcing as an effective cost arbitrage and quality maintenance tool and will definitely adopt outsourcing on different IT and non-IT related projects.

2) A shift from mere cost saving to access to qualified and lower-cost IT resources.

In 2010, Western Europe faced a significant shortage in IT skills and resources. In the UK, only half as many high school students went on to university to study IT/software development as did five years ago. In 2Q 2010, staff skills in C#, SQL, .Net and Java were in short supply, with the number of related jobseekers in decline. On the other hand, 2010 showed a significant increase in IT workforce and skills in Eastern Europe: Romania led in growth in the number of IT specialists with 12.33% followed by Ukraine with 9.51% growth. As per our Western European ITO study 2010, more than 20% of outsourcing companies admitted their plans to continue outsourcing their IT function in 2011 to get access to better qualified IT resources outside their home countries.

3) Nearshoring will hit the mainstream.

In 2011, more Western European clients will be outsourcing their IT nearshore (to Central and Eastern Europe) or nearshore and within own country. Of almost 2,000 non-outsourcing companies polled in the frames of our Software Development Best Practices Survey 2010, more than 22% plan to transfer their IT / software development nearshore versus only 11% of those who plan to outsource offshore. Factors that will be driving companies’ choice of nearshore outsourcing in 2011 are: geographical proximity (short travel time and, thus, increased communication with vendors), strong R&D potential of former USSR nations and strong language skills (Central and Eastern Europe offers not only good English language, but also German, French, Spanish, Italian language skills).

4) Service integration will help achieve innovation

In 2010 and previous years, many companies failed to achieve innovation in their outsourced operations, because they typically thought that transferring an IT project to be completed by the 3d party should enable them to focus on their core competencies. In 2011, more Western European IT leaders are expected to realize the importance of integrating the outsourced project management, orchestration and delivery, thus gaining full control of their sourced projects.

Judging from the perspective of ITO services providers, the following trends and changes are anticipated in 2011:

1) An increased focus on SMEs

In 2010, small and mid-sized enterprises accounted for 59% of the total EU economy, generated 67% of employment and contributed around two thirds of the EU GDP. In 2011, an increased demand to adopt outsourced IT services will come from the SME segment and providers should be ready to anticipate smaller and, thus, less profitable deals. To ensure more significant profits in the long term, IT providers will have to improve their adding-value service offering, cloud capabilities and modify current engagement models to help SMEs grow their business and, as a result, to benefit from their clients’ growth.

2) Innovative outsourcing engagement models will hit the mainstream

In 2011, Western European companies will be looking for a provider with the capacity to take over the entire product or application development process, and in some cases, help manage the entire business function. Therefore, companies will require from their potential partners to provide transparent cost structures, no hidden agenda, options to easily scale up or down in compliance with the current business situation and realistic HR growth capabilities for a preset period of time. ITO providers will have to adjust to such requirements and diversify/innovate their engagement offering. One of the innovative models that is likely to hit the mainstream in Europe in 2011 is the one in which IT vendor acts as a resource, office space and project mentorship provider, while the client retains 100% control of the outsourced project management and owns his own project teams set up nearshore for cost saving purposes.

3) No more client-silo approach

As businesses aim to learn more best practices by sharing knowledge with their peers across different industries, IT providers will be challenged to transform their client-silo mindsets and encourage collaboration between clients from various industry domains.

To conclude with, in 2011 European ITO will remain a highly demanded practice with some significant focus shifts towards agility, processes optimization, transparency of transactions and payments, innovation and cloud.

2010 State of Agile Development Survey Results Revealed

2010-12-16T12:20:00Z

VersionOne, one of the leading Agile management platform providers, has surveyed 4,770 companies from 91 countries between August and October 2010 in order to benchmark current level of Agile development adoption globally.

According to the survey findings, in 2010 43% of survey respondents consider Agile adoption to be moderately knowledgeable (down 2% from 2009), 25% find Agile practices extremely knowledgeable (down 2% from 2009) and 8% of companies believe that using Agile is very little knowledgeable (up 1% from 2009).

Regarding Agile adoption by company size, 32% of companies using Agile development are 250+ in headcount, 26% - 50 to 250, 24% - 0 to 20 and 18% - 20 to 50. In 2010, 31% of companies used Agile on 0 to 20% of their software development projects (up 1% from 2009), 25% run Agile on 50 to 95% of their projects (up 2% from 2009), 22% of companies run Agile on 20 to 50% of their projects (down 3% from 2009) and 22% use Agile on 95 to 100% of their development projects (down 4% from 2009).

SCRUM remains the most widely used Agile methodology (by 58% of companies surveyed, up 8% from 2009), followed by SCRUM/XP Hybrid (17% of companies, down 7%from 2009), while lean development is adopted by only 2% of companies (down 1% from 2009).

Regarding the leading causes of failed Agile projects, 14% of survey respondents pointed to the lack of experience with the Agile methods (up 1% from 2009), 11% said their company philosophy was at odds with the Agile values (similar to the 2009 findings) and 10% pointed to external pressures to follow traditional waterfall processes (down 2% from 2009). Overall, both in 2009 and 2010, 22% of survey respondents reported they had not experienced any failures in their Agile projects.

Regarding barriers to further adoption of Agile, 51% of companies pointed to inability to change organizational culture, 40% pointed to companies’ general resistance to change, 40% pointed to the lack of personnel with necessary skills needed to successfully implement Agile development, while cumulative 22% of companies reported the following barriers: lack of management support, project size and/or complexity, poor customer collaboration, lack of confidence in ability to scale Agile projects, long time to transition and budget constraints. Twelve percent of companies said they did not have any barriers to further Agile adoption.

The most common Agile adoption concerns listed by respondents are: a loss of management control (36%), lack of upfront planning (33%), management opposed to change (32%), lack of documentation (28%) and lack of predictability (27%). In 2009, the greatest concerns regarding Agile adoption were the lack of upfront planning (46%) and the lack of documentation (34%).

Overall, 37% of survey respondents admit using Agile to accelerate time to market, 36% - to enhance ability to manage changing priorities, 27% - to increase productivity, 24% - to enhance software quality, 24% - to better align IT and business objectives, and 10% - to reduce costs etc.

The State of Agile Survey demonstrates that respondents are increasingly using Agile methods on their outsourced projects: 32% of companies already do so (up 4% from 2009), while 13% plan to adopt Agile on their outsourced projects in the following months.

IT Sourcing Europe's Cool Video Ad By Google!

2010-12-16T09:06:00Z

This year IT Sourcing Europe has extensively used Google AdWords to invite as many European companies to participate in our All-European IT Outsourcing and In-House Software Development surveys 2010 as possible. We were very happy to receive this cool video ad gift from Google Team!

Thanks you Google!

Global Outsourcing Market Is Growing, Survey Says

2010-12-07T08:37:00Z

According to a new study by Duke University's Offshoring Research Network and PricewaterhouseCoopers, that surveyed 514 outsourcing service providers in 50 countries, more countries are ramping up outsourcing markets, giving India and North America increased competition. The study reveals that outsourcing companies in North America and India – regions which for a long time have led the outsourcing market – are being challenged by competition from Latin America, Eastern Europe, and Asia, in service areas such as contact centers, business process outsourcing, and information technology outsourcing.

"Growing competition has transformed the outsourcing industry into a global race for market share," says Charles Aird, Managing Director at PricewaterhouseCoopers. Typically, larger markets drive competition which spurs innovation and better, more cost-effective service. 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, according to the survey. 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.

The study results signal growth in the outsourcing market and illustrate that the outsourcing market continues to become a global market, not just an Indian and North American market.

Source: CIO

Expert Opinions on the Future of Central and Eastern European IT Outsourcing Market

2010-11-25T12:41:00Z

Central and Eastern European Outsourcing Association (CEEOA) has just pre-released its “Central and Eastern Europe IT Outsourcing Review 2010” aimed to improve business viabilities and the services delivery capabilities of CEE service providers through strengthening knowledge and business management competencies to increase overall skill levels to attract more prospects. CEEOA surveyed more than 300 IT players in 16 CEE countries, which makes more than 6% of the region’s market players.

The research finds that in 2009 the number of IT specialists employed by IT outsourcing services providers in the CEE region reached 95,000. Romania led in growth in the number of IT specialists with 12.33 %; Ukraine followed with 9.51% growth. During 2009, the global economy struggled with a major financial crisis. The second half of the year was marked by signs of stability, and many companies turned to outsourcing business practices in order to reduce their expenses. Thus, the ITO market received additional contracts. In some respects, the global recession became a good incentive for further developing the IT outsourcing and software development services market.

Regarding the main development trends on ITO market in CEE in the years to come, industry experts agree that the key market players (vendors and buyers) will be affected by search for new solutions to increase sales revenues, innovative service models such as SaaS, cloud computing and managed services, cost pressure and limited IT budgets, security concerns, need for flexibility, faster time to market and multi-site collaboration. “Clients expect more from vendors. They seek reliable partners helping them to solve business problems creatively. The trends in IT outsourcing go towards specialization and value-adding service offerings. Small providers are increasingly positioning themselves in lucrative niches, where they can focus and maintain a technical lead position. Medium and large providers are competing with innovative business models. Examples include dedicated client teams, flexible mixed-mode engagement models, idea creation and fast prototyping, shared risks/reward models,” says Franco Dal Molin, Switzerland’s Country Manager at Ciklum, a Danish innovative IT outsourcing company. Christoph Prieler, a famous offshoring executive, believes that “the current buzz in IT outsourcing is certainly about cloud computing” that will drive CEE ITO providers to upgrade “their service offerings to match the cloud needs of their existing customer base and to enable the access to an entirely new customer segment, the SME market.”

Regarding the CEE region’s role as a cluster of ITO services providers, its advantages include historically strong engineering tradition and technical training, geographic and cultural proximity and relatively low turnover. “The main difference [compared to Asian ITO providers] is that Europeans will try to tell the client how to do things better and may even argue with the client on technical solutions, for the best client benefit,” says Boris Kontsevoi, Certified Outsourcing Professional and CEO of Intetics, Co. Franco Dal Molin thinks that we can think of clusters of outsourcing companies in certain cities, like Kiev or Minsk, but not CEE overall. He says, “Rather than just claiming to be an IT cluster, the various CEE economies should promote and actively support complete “ecosystems”. An outsourcing ecosystem should consist of IT companies, universities, business parks, entrepreneurs, venture capital, developers’ communities, training programs, a favorable tax system etc. Only if all ingredients are in place, a region can establish itself as a solid pan-European outsourcing hot spot.”

Regarding ITO competition between the United States and Europe, the experts polled share the similar opinion that Europe will continue to outrun US as the biggest outsourcing spender. “According to Gartner, IT spending in Europe increased in 2010 by 5.2 percent comparing with the previous year, while the average increase of IT spending in the US amounts to “just” 2.5 percent in 2010 comparing to 2009,” says Magdalena Szarafin, Social Networking Manager at Indo-German Software Competence Network.

Overall, outsourcing experts feel rather optimistic about the CEE region’s capability to reach traditional outsourcing destinations like India and China in the years to come. According to the forecasts of those surveyed, the volume of IT outsourcing and custom software development services exported from the CEE region will reach about USD $5 billion in 2010.

(Source: “Central and Eastern Europe IT Outsourcing Review 2010” by CEEOA)

European IT Outsourcing Drivers 2010 Revealed

2010-11-25T09:12:00Z

IT Sourcing Europe, a UK-based nearshore IT Outsourcing (ITO) market research and advisory firm, announced today the completion of its All-European ITO research 2010. The research was conducted between April and November 2010 and aimed to explore the major trends, challenges and problem solving among the European companies outsourcing their software development (SD) function offshore (at least 2 time zones away from the homeland), nearshore (no more than 2 time zones away) and/or within own country. As a result, 1,557 companies from eight countries – United Kingdom, Germany, Austria, Switzerland, Netherlands, Denmark, Norway and Sweden – took part in IT Sourcing Europe’s study.

According to the study findings, in 2010 small companies appear to be the most active users of the outsourced software development in the following countries: Germany, Switzerland, Austria, Netherlands, Sweden, Denmark and Norway. United Kingdom is the only country surveyed in which mid-sized companies remain the most active adopters of SD outsourcing.

Regarding the overall SD outsourcing experience, the leading countries, most of whose companies have been outsourcing their SD function for more than 3 years now, are again United Kingdom and Germany, followed by Netherlands, Sweden and Denmark. Austria has the smallest number of companies outsourcing for more than 3 years and the greatest number of companies who first outsourced their development only less than 12 months ago.

Quite interesting findings were made with regards to the most popular destinations for the outsourced SD in 2010. Most of the German, Swiss, Austrian, Dutch, Swedish, Danish and Norwegian companies place their SD nearshore, while only the United Kingdom has the greatest ratio of companies that outsource their SD offshore.

As seen from the study findings, reduction of operating costs remains the most powerful driver of outsourcing decisions in all 8 countries surveyed. Among the other most frequently cited factors are: acceleration of time to market (UK, Germany, Netherlands, Sweden and Denmark), difficulty finding required IT resources and specific skills within own country (all surveyed countries except the UK), pressure from investor(s) and/or executive management to cut down IT/SD budgets (Switzerland and Austria), business development strategy improvement by focusing on company’s core competences (Norway) and freeing in-house resources for other critical tasks (the UK). Thus, cost efficiency and optimization and time to market acceleration are the top 2 pressures that pump up corporate decisions to outsource SD in the UK, Germany and all Nordic countries surveyed; while cost efficiency and willingness to get access to more expanded and qualified IT resource and talent pools are the top 2 outsourcing drivers in Switzerland and Austria.

More interesting and thought-provoking findings are available in IT Sourcing Europe’s “European ITO Intelligence Report 2010: Western and Northern Europe”

Study Shows How European Companies Choose Their Outsourcing Partners

2010-11-25T09:12:00Z

The study results show obvious similarities and differences in the ways how outsourcing companies from different countries behave in terms of outsourcing destination and vendor selection processes.

According to the study findings, low cost of software development and maintenance is the major factor helping determine where to locate the outsourced development in all countries surveyed except Austria, where the major factor is geographical and cultural proximity. Additionally, Austria shows very high rates of outsourcing nearshore and nearshore and within own country. On the other hand, Austria (along with Norway) shows the smallest ratio of companies outsourcing their SD within own country (only 5% of respondents). Other most frequently cited factors (in all countries surveyed) are: available IT resource and talent pool and positive references. Factors such as political/economic stability, legal system maturity, IP security, strong R&D base and proficient English language skills are considered by companies in the lowest priority.

In order to select an ITO partner, most of the companies surveyed in the UK and Sweden consider low services rates, while most of German, Swiss, Austrian, Dutch and Norwegian outsourcers consider vendor references and positive track record. Availability of specific skills that are hard to find within own country appears to be important for the majority of the UK, German, Dutch, Swedish, Danish and Norwegian companies, while innovative business model is a very decisive factor for German, Swiss, Danish and Norwegian outsourcers.

More interesting and thought-provoking findings are available in IT Sourcing Europe’s “European ITO Intelligence Report 2010: Western and Northern Europe”

New Research Reveals Actual Savings from the Outsourced Software Development in Europe

2010-11-25T09:11:00Z

According to the study findings, the majority of the UK, Swedish and Danish companies save 40%-59% of operating costs from the outsourced SD, while the majority of German, Swiss, Austrian, Dutch and Norwegian outsourcers save 10%-24%. Less than 10% of costs are saved by relatively big numbers of companies in Germany and Netherlands, while more than 60% of costs are saved by a lot of Austrian companies.

The study shows that most of Western European and Nordic ITO services buyers (cumulative 40.96%) still engage with their partners via “traditional” outsourcing models such as dedicated development center (DDC) or captive centers etc, which do not allow them to have as much control of the outsourced projects and development teams as possible and have transparent pricing structures. Only cumulative 21.52% of the European companies know exactly and cumulative 1.52% of companies know partially what they pay for and are fully/partially involved in the process of HR hiring for their outsourced projects.

As per the study findings, the actual annual incurred costs of SD outsourcing and the expected (contracted) costs are about the same for most of the UK, Swedish and Danish companies. For most of German, Swiss, Austrian, Dutch and Norwegian companies the actual incurred costs are up to 25% higher than expected. Denmark is the only country among the surveyed ones whose outsourcers (2% of respondents) report actual costs to be 50% to 75% lower than expected. Additionally, 2% of the German, 1% of the Swiss, 1% of the Austrian and 1% of the Dutch respondents claim that their actual incurred costs of outsourcing are more than 75% lower than expected.

More interesting and thought-provoking findings are available in IT Sourcing Europe’s “European ITO Intelligence Report 2010: Western and Northern Europe” .