Ukraine hailed as Europe’s top IT outsourcing destination

Ukraine has been named Europe’s top IT outsourcing and software development destination, according to a report conducted by industry specialists AVentures Capital in association with Sourcingfocus.

The nomination is a testament to the sector’s rapid and consistent growth in the country, which has managed to weather extreme political instability. The IT service and software development sector has, over the years, reported double-digit growth figures.

The growing importance of IT for the Ukrainian economy can be explained by the conflux of a highly internationally-focused group of local IT companies, and the large sums of investment poured in the country for R&D development by global IT giants. Big players like Cisco, Oracle and Samsung have all invested in the country’s booming R&D sector.

The report reveals that by 2020, Ukraine’s IT engineering workforce will double to reach 200,000. IT is now the third biggest export sector in the country with an export volume of $2.5bn. At the moment, the US is by far the largest destination for Ukrainian IT exports representing over 80 per cent of trade volume.

The report also discloses that the current period of political turbulence has had little effect on Ukraine’s IT sector, despite having hampered overall growth in the country. The findings are in line with declarations by both local and international IT companies.

Read the full report.

Source: Sourcingfocus-Ukraine hailed as Europe’s top IT outsourcing destination

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Indian suppliers are mopping up Nordic business

India-based IT suppliers are winning contract after contract in the Nordic region and leaving large footprints in the process, which can only mean more will follow.

In recent weeks, there have been major outsourcing deals announced in the region, with Indian suppliers claiming a huge chunk of them.

For example, HCL made its acquisition of Volvo’s external IT services arm (Volvo IT) official in February 2016. The deal saw around 2,600 Volvo Group staff – most located in Sweden – offered employment by HCL.

HCL also announced a deal with Swedish power tool maker Husqvarna to provide IT infrastructure and application services.

In addition to the Volvo IT takeover, HCL increased its footprint in the region with a delivery centre in Norway and another in nearby Baltic country Estonia.

HCL is not alone, with fellow Indian tier one supplier Wipro also cementing deals in the region.

In November 2015, Norwegian supermarket group Coop signed a five-year infrastructure and managed services agreement with the supplier. Meanwhile, Swedish lock manufacturer Assa Abloy is moving to a cloud-based service model under a five-year IT infrastructure outsourcing deal with Wipro.

Peter Schumacher, director at business consultancy The Value Leadership Group, said Nordic firms have lost their way. He added that it is not dissimilar to when the US giants allowed Indian firms in under the radar, when big business craved low cost IT support amid Y2K fears.

“In response to the advancing offshore firms, Nordic firms have been retrenching, delisting and focusing on operational excellence and localisation. Today, most firms are boxed-in and even more strategically disadvantaged,” said Schumacher.

Read more about outsourcing in the Nordics

He added that Tieto’s revenues for example are down 20% since 2008, while leading offshore-based IT services firms have at least doubled their European revenues.

“European firms have failed to build advantages, rather than just eliminate disadvantages. Most have fallen behind on the change curve and remain trapped in outdated business models, practices and paradigms.”

Ajay Davessar, global communicates head at HCL, told Computer Weekly that – while Europe is the company’s fastest growing region in terms of business – the Nordic region is the fastest in Europe.

He said the Nordic region is being set up as a hub for mainframe skills that will target customers that still rely heavily on robust mainframe environments. These include financial services, utilities and heavy manufacturing.

Growth in the Nordics

HCL’s acquisition of Volvo IT gives HCL mainframe resources that will create a platform for further growth in the Nordics and other European countries.

HCL has an impressive list of customers based in the Nordics, including Electrolux, Statoil Vestas, UPM Kymmene, OP Pohjola, Nokia, Husqvarnam, Volvo, DNB, Ikea, and Danfoss.

In 2014, Gartner research analyst Mika Rajamäki told Computer Weekly: “Based on 2013 figures, Indian IT suppliers have been growing faster in the Nordic market than the traditional service providers.

“If the annual growth of the traditional suppliers has been 2% to 3%, Indian companies have been growing by almost 20% a year. What Indian suppliers do very well is to rapidly take over a customer and invest in the relationship,” added Rajamäki.

Source: computerweekly-Indian suppliers are mopping up Nordic business

How to get the most out of an IT outsourcing vendor visit

In the rush to seal deals and keep costs low, IT outsourcing customers are skipping a critical due-diligence step in selecting an IT services provider, conducting site visits. Here’s how to do it right.

IT organizations are conducting fewer site visits before signing new offshore outsourcing deals. IT leaders “due to a sense of urgency in the sourcing and selection process, lack of time and the cost of the travel investment” are less inclined to take the long-distance trek, says Steven Kirz, managing director at outsourcing consultancy Pace Harmon. “Also there is a perceived lack of benefit from these trips.”

But the main reason this important due diligence step may have failed to deliver in the past was that the wrong person was making the journey at the wrong time, says Kirz. “This type of trip is not for the CIO – it is for the key IT staff members who are tasked with making the outsourcing relationship work and will be engaged with the service provider on a day-to-day basis,” he explains. “Also, the best time to go is before final section, when there is a short list of providers, as the visit allows direct interaction with the provider team leads to judge quality and identify and resolve potential issues before final selection.”

When companies opt out of paying a visit to potential providers offshore delivery centers, they can get hit with any number of surprises after they sign a . The team leads proposed on paper aren’t the team leads that show up on day. Cultures clash. Transition plans are built on false assumptions.

With the right approach, onsite visits can be a critical part of the outsourcing decision making process, turning up the kind of information that helps IT organizations select the appropriate partners. “The clients that go to India have a much smoother transition and deal overall as they have already figured out issues and how to work together to resolve them,” Kirz says.
Following are some guidelines for getting the most out of an outsourcing vendor visit:

When to go

Book your travel when negotiations are almost complete — that is, before the lawyers get involved, when you’re working through service requirements and key contract provisions with a short list of providers. “This is the sweet spot for outsourcing provider visits as providers that know they are shortlisted, but not yet selected, make the investment to put their highest quality resources forward to win the business,” Kirz says.

Who to send

The IT staff members charged with making the outsourcing relationship work day in and day out should conduct the site visit. “CIOs can make it easier on those responsible for the site visit by making sure their day-to-day responsibilities are backfilled during the trip and recognize that the individuals will have extremely limited access and time (that means no time) for any other obligations,” says Kirz.

Who to meet

Make sure the supplier involves the team leads and as many of the team members who will be responsible for the project as possible. The provider will likely insist on having key executives and sales people participate, but push back on that. “It remains difficult to convince the supplier that the best way to winning the business is to let the customer team have focused time with the provider team,” says Kirz, “but we overcome this every time.”

 

Forget about executive decks and sales presentations. “Nothing should be done on the site visit that could have been done at home,” advises Kirz. Most shortlisted vendors will have similar capabilities in areas like backup power or physical security. This should be a practical visit for getting to know the proposed solutions, detailed project plans, team members, and tools. “It is the only way to get a real sense of the ability to succeed,” Kirz says.

Meet and rate the quality, experience, expertise, and cultural fit of the proposed team, particularly their ability to collaborate and add value. Review the details of the proposed solution and transition to determine how practical it is to your company’s specific situation. Observe how the service provider actually deploys and uses the proposed tools with other clients and determine how or if they will work in your own environment.

“All the providers should look relatively the same in terms of pricing, requirement and terms, until those visits,” says Kirz. “Customers typically meet with three to five shortlisted providers and by the end of the trip have clear frontrunners.” If a visit is absolutely not possible, some suppliers are open to flying their proposed team leads to the U.S., or in the worst case scenario, conduct video conferences.

Source: CIO.com-How to get the most out of an IT outsourcing vendor visit by By Stephanie Overby

When outsourcing makes sense

Business owners tend to spend a lot of time in their businesses working on the day-to-day operations. Some can become so consumed with just running the business, they have no time to strategize and plan the future growth of their company. Entrepreneurs often don’t want to spend money on services when they can “do it themselves.” What most don’t realize is that every choice comes with an opportunity cost … what could you do with your time if you hired someone else to do the work for you? You may save money doing it yourself, but you do not make money doing it yourself.

A few areas to consider outsourcing are Accounting, Telecom Management, Website Management and Public Relations:

•Accounting, love it or hate it, is too important for your business to not have a professional team categorizing your business expenses, implementing your payroll, indicating taxes due at regulated intervals, and making sure the payables and receivables are taken care of. A good bookkeeper can handle the day-to-day accounting, a payroll company can handle payroll and proper withholdings, and a CPA is there for tax accounting; thus providing a great team that enables you to know your exact company performance at any given time.

•Telecom Management is extremely important with daily reports of cyber-terrorism and hacking scandals. Dealing with continual upgrades, maintenance and technical difficulties is frustrating and time-consuming. Technology is such an integral part of any business today, it is important to have technical support, remote monitoring, and troubleshooting to ensure your company will not be crippled because of poor data management.

•Having a website, but having no idea how to optimize it for search engines or what to post in relation to content that will boost your rankings, can mean a major waste of money if no one can find you. Most companies have a website, but ensuring they are useful, user friendly, easily laid out, and responsive is important to web browsers. As the saying goes, “You never get a second chance to make a first impression.” Building your own website may be cheap, but is your customer’s first impression of your company the one you want them to have?

•Public Relations firms help you get your message out in the competitive media landscape. Hiring a firm on a project or retainer basis means you get a concentrated PR effort when you need it. Outsourcing makes a great deal of sense when you want to integrate an entire online and offline strategy for marketing communications.

In the end, outsourcing depends on the goals and priorities you set for your company. Outsourcing some of your business needs may make the most financial sense in the long run if you turn your valuable time and attention toward growing and improving your business. When business owners stop and ask themselves, “Is this the best use of my time?” and the answer is no, think about outsourcing as an option.

Source: floridatoday-When outsourcing makes sense

IT outsourcing: What to do when your contract is about to end (whitepaper)

Outsourcing contracts worth billions are up for renewal in the next few years. In this special report, Computer Weekly examines how unprecedented change is complicating the CIO’s renewal decision.

Topics covered:

  • According to ISG, there are nearly 3,000 IT outsourcing contracts worth more than $5m a year around the world coming up for renewal in the next three years – representing a combined total value of over $270bn (£175bn). Among them are 1,400 deals in Europe, the Middle East and Africa (EMEA) worth more than $14bn altogether. Accenture, Atos, BT, Capgemini, HP, IBM and TCS all have a large number of contracts coming to the end of term.
  • When its major IT deal with IBM (previously PwC), Fujitsu and Concentrix came up for renewal after 13 years and £1.6bn spent, the Driver & Vehicle Licensing Agency (DVLA) undertook a two-year project to bring it all back in-house. The move in-house brought more than 300 staff to the DVLA from the suppliers, taking its total IT workforce to over 630. The insourcing is expected to save the government agency at least £225m over 10 years on top of £70m on procurement costs. The DVLA plans to become an agile IT organisation.
  • Significant technology change will have taken place since old contracts now approaching renewal were first signed. CIOs need to know how cloud computing, automation and artificial intelligence can help them meet the aims of the business, but they also need to be able to spot a fad. This, though, is easier said than done as businesses enter the new territory of digital business.
  • Finding the best location – or mix of them – for IT services has become a more complicated task in recent years because CIOs have more options. Suppliers all around the world now offer IT and business process delivery services, all of which have their own advantages.

Download the WhitePaper from: Computerweekly-IT outsourcing: What to do when your contract is about to end

 

 

 

IT outsourcing starts year with a bang

The restructuring of deals fuelled a sharp increase in money spent on IT and business process outsourcing (BPO) in Europe, the Middle East and Africa (Emea) during the first three months of 2016.

According to ISG, which monitors deals worth more than €4m, the value of deals during the first three months of 2016 for Emea was €2.25bn, which is 19% higher than the same period in 2015. There was also a 28% increase in the number of deals.

There was a 91% increase in restructuring contracts. “The notable value and volume gains in BPO, along with the surge in restructuring activity, reflect growing demand for business outcomes in outsourcing, as well as the opportunity for organisations to digitise and make room for new technologies,” said John Keppel, partner and president of ISG.

“The increased ACV [all commodity volume] and contract activity in the first quarter are a welcome contrast to 2015’s sluggish start and suggest a healthy market flow for the region,” he said.

“The strong year-on-year growth in ITO [IT outsourcing] value and volume suggests that technology systems continue to have a positive impact in many areas, even as work is increasingly moved to the cloud.”

In the UK, the value and number of contracts both grew around 10% in the period compared with 2015. ISG said, after a couple of slow quarters, UK activity “has returned to historic levels”.

In Germany, Austria and Switzerland, the value of contracts in the first quarter of 2016 was at its lowest level for eight years, despite the number of contracts signed increasing 32%.

France had a recovery after a slow start to 2015. The value of contracts increased 33% and the number of contracts doubled. In the Nordic region, there was a 200% increase in contract numbers.

Source: computerweekly.com-IT outsourcing starts year with a bang