Jesper Bagger, Project Director at Berlingske Media, shares his company’s outsourcing experiences at the ITB Conference “Off-Shore – How easy can it be?”

Berlingske, the oldest Danish media house with a 262-years history, moved a substantial part of its software development to Kiev, Ukraine, in 2010. The key factor driving a corporate decision to outsource nearshore was the search for savings. In Ukraine, an IT developer costs about half of the Danish one and the price difference between the Danish and Ukrainian IT consultants is even greater.

According to Jesper Bagger, Berlingske’s Project Director, phasing out 5 to 6 IT consultants in Copenhagen allowed them to hire around 25 software developers in Kiev.

Last year Jesper was tasked to establish an IT branch abroad for the purpose of developing websites and CMS for the regional and local newspapers as well as mobile apps for the Danish Media House and Polish, Dutch and Norwegian newspapers owned by Berlingske’s parent company – Mecom. The required IT department was to be paid off within 12 months.

Although the nearshore IT department is yet far from being a mature organization, it has already delivered a lot of positive results, says Jesper Bagger. Among them are 100 new apps, re-launched and upgraded websites such as B.dk and Dinby, integrated e-commerce engines etc. The IT department in Kiev currently counts about 35 specialists.

Why Nearshoring?

So, why did Berligske actually choose Ukraine and not India or Latin America for its external development? Jesper says there were several decisive factors. One of them was that when you choose to establish and manage an outsourced team, you should be ready to move quickly to the location. Flights from Copenhagen to Kiev are much shorter and cheaper than to the offshore locations. Another reason was that the company wanted to keep its outsourced operations close to Denmark. And overall, the mentality of the Ukrainians, especially those residing in Kiev, is almost the same as in Denmark.

Eventually, it was chosen to partner with the Danish company Ciklum that assisted Berlingske to set up IT operations in Ukraine.

Jesper is convinced that it takes more than mere savings to make any outsourcing adventure a huge success. It is essential to establish an effective cross-border communication and full ownership of the outsourced product.

Berlingske ensured close connections with its Kiev-based team via massive travelling and visible presence on the spot. Before any deadlines, the entire Ukrainian team relocates from Kiev to Copenhagen for several weeks. In the regular work, there are weekly video conferences between Kiev and Copenhagen that allow Ukrainian and Danish teams to constantly see and interact with one another even being thousands of miles away.

“It is also about something as basic as letting people get drunk together, letting them celebrate deadlines and successes together. It helps to break down the barrier between ‘them’ and ‘us’,” says Jesper Bagger.

However, when setting up the outsourced operations, Jesper faced a dilemma of whether he should retain the Danish management style which delegates a lot of responsibility and expects employees to live up to responsibility or whether he had to align himself to the local traditions. Over time he has concluded that he should retain the Danish style of management, but shouldn’t expect people to live up to responsibility at all times. Instead, Danish project managers must be prepared to lead by examples from time to time and hand out warnings, given that some of the Ukrainians have a very liberal interpretation of the standard morning meeting hours. But on the other hand, such practices help both Danes and Ukrainians to learn from each other. To enhance knowledge sharing across teams, regular educational activities are launched, from Scrum workshops to English lessons and coaching. And it is not only the Danish specialists that can teach Ukrainians. For instance, they got a very smart and qualified Scrum expert who immediately pointed out that the way they developed their apps was not Agile. Another strength of the Ukrainians is quality assurance and testing, says Jesper.

Due to a two-way knowledge transfer, Berlingske got a chance to significantly increase its project management quality and overall project’s success.

Jesper Bagger concluded that he is almost satisfied with his outsourced projects, but it is impossible to be totally satisfied with anything related to the IT development. In IT there is always an opportunity to improve and/or do things in a new way. And when he hears other outsourcers say they are totally satisfied with their development, he becomes somewhat skeptical about it.

Original article by Kasper Villum Jensen was written for ComOn.Dk and can be accessed at http://www.comon.dk/nyheder/berlingske-sadan-bankede-vi-en-it-afdeling-i-ukraine-op-pa-lyntid-1.459731.html

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Comments
  1. a.lebedev says:

    Belarusian developer costs still cheaper

  2. Yes, 10-15% cheaper, but Ukraine has 20,400 IT specialists already employed within the industry, while Belarus has only 11,600 (est. 2010, source: Central and Eastern European IT Outsourcing Review 2010 by CEEOA). On the other hand, there’re an estimated 20,000 IT graduates/per year in Belarus vs 14,000 in Ukraine. Plus, Belarus has a huge High-Tech Park that stimulates the rapid growth of the IT services export. I guess the only problem that Belarus still has is its “bad” image at the international arena as a “country led by dictator”, which obviously makes a lot of foreign companies and investors stay away from moving to Belarus. But I agree that compared to Ukraine Belarus offers a more effective cost arbitrage.

    • a.lebedev says:

      Belarusian IT graduates are forced to work 2 years on the state. But after two years, not all choose freedom.
      The Belarusian IT companies is not enough customers. For example, a company in which I work. To blame “` bad `image at the international arena” ..

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