Pan-European IT Outsourcing Intelligence Report 2011 Unleashed

Despite the last year’s predictions that the European Union is likely to catch up with the United States by the total IT outsourcing (ITO) contracts value in 2011, the factual state of affairs demonstrates a substantial decline in the European outsourcing transaction volumes (both in ITO and business process outsourcing (BPO)). The last Global Services Industry Quarterly Report by Everest Group, one of the world’s leading outsourcing consultancies, determines this decline to make 7% from Q2 2011. On the other hand, IT Sourcing Europe’s country-specific surveys show that the number of the low-value and less asset-intensive outsourced IT/development projects has increased in Europe in 2011, compared to 2010.

The Pan-European IT Outsourcing Intelligence Report 2011 presents the summary of the All-European IT Outsourcing and In-House Software Development research conducted between February and December 2011. In the course of the research the following European countries were surveyed (in alphabetical order): Austria, Cyprus, Denmark, Finland, Malta, Norway, Sweden, Switzerland, Netherlands and United Kingdom.

German IT Outsourcing Intelligence Report 2011

We’ve just made another Christmas present for all IT outsourcing trendwatchers by releasing the German IT Outsourcing Intelligence Report 2011. The Report is based on the survey of the 304 German companies that either outsource their Software Development / Information Technology function(s) to an external service provider onshore (within Germany), nearshore (within/close to the same time zone) and/or offshore (more than 2 time zones away), or develop their software/IT solutions in-house.

Some of the key survey findings presented in the Report are:

• German B2B software development companies are the most active users of the outsourcing services
• Most of ITO projects take 3 to 5 IT specialists to complete and are valued at €500K+
• Web and mobile solutions are most outsourced, while SaaS/Cloud ones are least outsourced in Germany
• Nearshore is the most preferred ITO destination
• Most of German companies outsource to reduce operating costs, focus on core competences, access available IT resources outside Germany and speed up time-to-market
• The key issues in ITO are poor communication with vendor’s teams, change management, cultural difference and poor project management on vendor’s side
• Most of German companies outsource their IT / development to small providers via the fixed-price/time-and-material (T&M) models
• Most of companies refuse to outsource, because they want to have 100% managerial control of own software / IT projects

More interesting findings as well as the 2011 trends and behavior patterns’ comparison to the 2010 ones are available in the actual Report.

Central and Eastern European IT Outsourcing Landscape Report 2011

We’ve just released the new “IT Outsourcing Landscape Report 2011: Central and Eastern Europe (CEE)” aimed at comparing and contrasting the 6 CEE countries in terms of:

• capacity for innovation
• IT labor market efficiency
• flexibility
• spending on research & development (R&D)
• number of IT specialists employed in IT outsourcing industry
• IT rates
• Total Cost of Ownership (TCO) of IT project teams

The Report concludes that Ukraine and Belarus are currently holding the equal positions as the leading non-EU, while Romania is the leading EU locale for IT outsourcing services in the CEE region in terms of cost effectiveness, access to innovation and size of IT resource pool available.

The Report is currently available for free download here.

IT Sourcing Europe Ends Its 2011 Survey Spree With Cyprus

We have just finished a series of the European IT Outsourcing (ITO) and In-House Software Development surveys conducted between February and December 2011. Cyprus is the last EU country to have been surveyed. The survey arrived at the following key conclusions:

• Cyprus-based B2B IT companies have the greatest demand for ITO services among other industries and verticals
• The prevailing majority of ITO projects fall under the web development domain, require 1 to 5 IT specialists to complete and do not exceed € 49K in value
• Multi-sourcing is an obvious trend of 2011
• Most of the Cyprus outsourcers transfer their development / IT either nearshore alone or distribute them among multiple providers nearshore, offshore and within Cyprus
• Reduction of operating costs is the core driver of corporate decisions to outsource in Cyprus
• The key challenges of the outsourced IT / software development in Cyprus are poor communication with vendor’s project management and executive teams and vendor’s inability to understand their clients’ business objectives
• Key steps that Cypriot companies make to respond to their ITO challenges are ITO partner change, extension of deadlines and dedication of additional managerial resources
• Most of Cypriot companies manage to save 10% to 24% of operating costs from their ITO endeavors
• More than 66% of non-outsourcing companies complain about the high cost of domestic IT resources and personnel and more than 33% complain about the scarce local IT resource pool
• Around 30% of companies already consider outsourcing as an option to leverage costs and access broader resource pools in the future

These and other thought-provoking findings have been compiled in the Cyprus IT Outsourcing Intelligence Report 2011 that is currently available for free download.

The results of the All-European ITO Research 2011 will be presented in the Pan-European IT Outsourcing Intelligence Report 2011 that is expected to be released before December 25th, 2011.

We thank all European companies that dedicated their time and completed our survey questionnaires!

Norwegian IT Outsourcing Intelligence Report 2011

We’ve just released the new “European IT Outsourcing Intelligence Report 2011: Norway” that is currently available for free download here. The Report is based on the responses of the 491 Norway-based companies. The ratio of outsourcing to non-outsourcing companies surveyed was 284 to 201.

Key takeaways:

• The greatest demand for ITO services in Norway comes from B2B software development companies

• Most of ITO projects take 3 to 5 and 10 to 19 IT specialists to complete and are valued at€ 0-199K

• Web solutions are most outsourced, while Cloud computing is least outsourced in Norway

• Most of the Norwegian companies single-source offshore or onshore

• Most of the Norwegian companies outsource to reduce operating costs, accelerate time to market, access IT staff outside Norway and release in-house staff for other business purposes

• The key issues in the Norwegian ITO are delayed project delivery, poor project management on vendor’s side and cultural difference

• Own Development Team is the most widely used engagement model in Norway
• In the future, more Norwegian ITO buyers will go nearshore

• Maximum project control retention is the key barrier that prevents many Norway’s companies from adopting ITO services

More thought-provoking findings are available in the Report.

Analysis of the German Market for IT Outsourcing Services 2011: Video Podcast

IT Sourcing Europe and the German-Austrian-Swiss Outsourcing Association (Der Outsourcing Verband) announce the launch of a series of joint video podcasts on “Analysis of the German IT Outsourcing Market 2011″. Subscribe here to watch Part 1: “Introduction to the German IT Outsourcing Market”, in which Viktor Bogdanov, IT Sourcing Europe’s Managing Director and Stephan Fricke, CEO of German-Austrian-Swiss Outsourcing Association, discuss

• adoption of ITO services across diverse German industries
• general profile of German ITO service buyers
• factors that drive German companies to outsource their IT / software development functions to external providers onshore, offshore and/or nearshore
• key ITO challenges and solutions

All questions and remarks can be left as comments right below the videocast  and will be replied as soon as possible.

Alternative videocast link - http://www.outsourcing-journal.org/german-market-ito.html

Ciklum Rated Best Large IT Employer 2011 In Ukraine

News from our partner:

For the second consecutive year Danish IT Outsourcing services provider, pioneer of the own development team model in Ukraine gets highest score for its working conditions and environment amongst software development companies operating in Ukraine, as rated by the IT specialists themselves.

KIEV, Ukraine – November 02, 2011 – Ciklum, a Danish IT outsourcing services provider that specializes in nearshore software development in Eastern Europe, in Ukraine and Belarus, rated Best larger IT Employer 2011 in Ukraine by the annual market study conducted by the Ukrainian Community of Software Developers, DOU. 

Austrian IT Outsourcing Intelligence Report 2011

European Niche Capabilities Driving Demand, According to GS

Europe certainly can’t compete with offshore destinations like India and Philippines on the cost front, but when it comes to innovation and high-end technology solutions, it is very often seen as the best bet.

Major Strengths That Define Europe

Talent Pool

Europe has a vast talent pool, engineering expertise, and high standard of education. Dmitry Loschinin, President and CEO, says “Confidence is quickly rebuilding and more and more companies are turning to Eastern Europe in particular for technology services expertise. Reason: The region’s talent pool has never been stronger.”

Multilingual Skills

Multiple language capabilities differentiate the European market from most other destinations. There is probably no other such destination that can support six to seven languages at one place. This has enabled the growth of BPO operations and has attracted numerous service providers to the region.

ITO or BPO- Which is Hotter? 

According to Forrester report Market Overview: European IT Infrastructure Outsourcing (2011), cloud-based services are dominating the infrastructure outsourcing market. As concerns over security issues prevail, private dedicated clouds and hybrid solutions are being offered by service providers. Forrester expects that resistance will change as more business professionals push for the flexible capabilities that cloud enables.

Inside the Midmarket: a 2011 Perspective

Today’s midsize firms must reconcile seemingly opposing strategic mindsets – keeping costs down and increasing efficiency while reshaping business models and infusing them with intelligence. The findings of the 2011 IBM Worldwide Study reveal that midsize firms are, in fact, able to juggle these dual priorities to focus on what will offer the most value to their organizations. When asked about their strategic mindset, 79% cited customers, innovation, and growth as their major priorities, with 21% primarily focused on reducing costs and increasing efficiency.
Comparisons between findings from this study and those from 2009 reveal a broadening midsize businesses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

To advance these priorities, more than 70% of midsize firms are seeking a consultative, versus purely transactional, relationship with their primary IT provider. And whether they are part of the two-thirds who view themselves as advanced when it comes to IT adoption or among those who lag, all midsize firms cite product reliability, product performance, and competitive pricing as the top reasons for choosing their primary IT vendor.

 

Although midsize businesses clearly want to adopt new, innovative business strategies, make changes required to improve their performance, and partner with an IT provider who can help advance their business strategy, they still face substantial challenges to executing against those goals. Not surprisingly, a key barrier, despite increasing budgets, is cost. This is cited by 58% of respondents as being one of the top barriers to achieving their key IT priorities. Difficulty implementing new technology also represents a top challenge worldwide.

 

Source: “Inside the Midmarket: a 2011 Perspective,” IBM Worldwide Study 2011