Did you know?

As a part of our creative activities :) we're pleased to introduce encyclopedoical category "Did You Know?" together with #nearshorefacts hashtag on twitter to provide you with quick and notable facts surrounding nearshoring industry.

As a first shot we'd like to cite CEE IT Outsourcing Review 2010 Fact Collection.

First Fact:

In 2009, the number of IT specialists employed in companies providing IT outsourcing and software development services in the CEE region reached 95,000. Ukraine and Romania led statistics with 18,000 and 14,000 respectively

LinkedIn Discussion - Agile and Nearshore - two elements of formula to successful software development (IT Outsourcing)?

During the last years we see an astronomic adoption of Agile methodologies to software development process of organizations across industries. Latest Forrester Research of 1300 IT Professionals revealed that 35 percent of respondents stated that agile most closely reflects their development process.

Being unique in their specific approaches each of Agile methodologies shares the common idea of aligning programmers and business users more closely together to build the right product faster. This is especially important to IT outsourcing industry as usually there is a lack of communication between customer and service provider.

In this way Agile promotes more direct and face-to-face communication and collaboration between two teams with customer side engaged in the product building.

Yet this might be difficult to achieve in long-distance engagements, where far-travels, time-zone and cultural differences might hamper collaboration and coherence between the teams.


Well some outsourcing practitioners say “one can perceive Nearshore and Agile as two core elements of a certain formula to effective software development.”

In this formula Agile is responsible for the rapid delivery of business value and smooth adoption to changing requirements through the better alignment between programmers and business users, while nearshore chemicals, namely proximity, cultural and business language constructs are actually ensure that alignment between the teams.

What is your insight? Is distance still matter in today's technology-enabled world? And what is your take on combining Agile + Nearshore as well as comparing Agile to traditional (non-iterative) methodologies?

Please share your insight on these questions here or in LinkedIn

The overview of the study prepared on this topic might be founded in our previous article "Agile and Nearshore - Formula for Successful Software Development".


“Agile and Nearshore - The Formula to Successful Software Development”

"It's time for software professionals to stop sitting on the fence where agile is concerned.

Forrester Report 2009

This is the quote from our new research “Agile and Nearshore - The Formula to Successful Software Development”, which is officially available here

We would like to draw a special attention to this work, as the aim of it is to give a broad overview of the Agile development methodologies, their practical appliance and successful combination with nearshore IT service delivery models.

The study analyzes the history of Agile development, discusses the main changes occurred in commercial software development sector over last years and presents a real-world case-studies of successful implementation of Agile methodologies in conjunction with Nearshore delivery approaches.

The study features successful implementations of Agile methodologies for software product companies “Borland”, large ICT multinationals “British Telecom” and professional ITO service providers “Levi9 Global Sourcing”. Especially the last one, as the company successfully crafted these two elements of successful software development into one robust approach!

Want to know more about the formula and real-world case-studies check out our report!

Coming soon......

Cio's embrace custom application development

As the recession eases, senior IT executives are shifting their focus from using
technology to reduce costs to using technology to drive revenue. At the same time,
improving customer service has become a pressing concern at the highest levels,
as companies are intent on maintaining relationships with profitable customers
and acquiring new ones. CIO magazine’s 2010 State of the CIO survey found that
managing customer relationships as a core function jumped to 34 percent from 18
percent the previous year.
CIOs are in an ideal position to help improve those relationships by implementing
IT solutions that can meet customers’ unique needs. This report focuses on how an
increasing number of organizations are using custom application development as a
means to enhance customer service with tailored solutions.
According to a poll conducted by IDG Research Services, nearly two-thirds of CIOs
and other senior executives surveyed listed improving customer satisfaction among
the top three factors driving the need for custom application development; they
also cited the need to differentiate their companies from competitors, and the
need to comply with regulations and industry mandates.

Austrian IT companies chose nearshore for outsourcing their software development

As a part of its Pan-European IT outsourcing research 2010, IT Sourcing Europe, a UK-located ITO research and advisory agency presented its findings of Austrian IT Outsourcing Software Development survey.

The survey aimed to explore the key trends and challenges among software development firms that outsource their software development areas to the 3rd party outsourcing providers.

In the period between September and October 2010 approximately 160 small, mid-sized and large companies across verticals in Austria were surveyed.

The survey results indicated that the number of nearshore software development outsourcers is double the number of offshore outsourcers (32% vs. 16%). For the time frames the study differentiate as offshore at least 2 time zones away from the home country, while nearshore maximum 2 time zones away or within Austria.

These figures supported by the top outsourcing drivers of the choice of the outsourcing destination in Austria which are: geographical and cultural proximity (25%), available IT resource pool (19%) and low costs (18%);

Among the main outsourcing goals polled companies indicated the following: to reduce operating costs (30% of respondents); to get access to more qualified resources and skills which are hard to find within Austria (24% of companies polled) and to respond to pressures from investors and/or executive management to cut down software development budgets (22% of participants);

The majority of the Austrian companies surveyed (28%) outsource 40% to 59% of their entire software development function, while only 2% of companies outsource less than 10% and 19% of companies outsource 90% to 100% of their software development volume.

The most outsourced area of expertise in Austria is Web 2.0 (Microsoft ASP.NET, Java, EpiServer, open source etc) – 42% of companies polled, followed by mobile development (34%). The least outsourced area of expertise is embedded development (only 3% of companies surveyed).

IT Outsourcing Market in Central and Eastern Europe: Trends, Figures, Predictions

Nearshore Blog analyses main trends surrounding IT Outsourcing market in CEE region


About CEE Review
Trends Confirmed!


The Nearshore Blog in conjunction with Levi9 Global Sourcing are pleased to present an analysis of “the Central and Eastern European IT Outsourcing Review 2010” annual research conducted by CEEOA with the aim to study main trends, figures and predictions and update the perspective on the potential of the CEE region for provision of nearshore IT outsourcing for the Western European countries and for offshore IT outsourcing for the US market.

The CEE IT Outsourcing Review is the research work that became one of the most demanded analytical source about the state of IT outsourcing market in CEE region within such a short period of time celebrates its third edition this year.

Being an information partner to CEEOA traditionally the Nearshore Blog team conducts its overview of the research and provides the perspective on the main trends and predictions surrounding IT outsourcing market in CEE region.

From this partnership it became a good tradition to exchange the views and predictions for the time to come and we are pleased to say that historically our views are in line, therefore our work represents a complementing rather than debating character.

This year the study appeared exactly the same way, so we’re pleased to present our overview of “Central and Eastern IT Outsourcing Review 2010”.

About CEE Review

Central and Eastern European Outsourcing Association (CEEOA), an information partner of the Nearshore Blog has been conducted the research project “CEE IT Outsourcing Review” annually since 2007. The previous issues of the report have been accessed by more than 15,000 people annually and were referred by industry research heavyweights. KPMG referenced the report in its “Exploring Global Frontiers” study.

This year “CEE IT Outsourcing Review 2010” represents a unique combination of proven research methodology, meaningful expert view and representative online surveying. By encompassing 246 companies operating in outsourcing service market from 16 countries alongside with 25 representatives of national outsourcing associations and impressive panel of leading industry experts the study provides a comprehensive yet accurate overview of the state of IT outsourcing industry in the CEE region.

Trends Confirmed

Being an information partner to CEEOA, the Nearshore Blog team was particularly pleased to learn that many of the predictions and trends we indicated previously on Blog’s pages are in line with the study data and leading industry’s experts forecasts.

Several independent experts and outsourcing activists kindly responded to the survey questions and provided their insights with regards to major trends and currents in IT outsourcing industry worldwide and in the CEE region specifically. Among the expert panel there are:

Phil Fersht, Founder and CEO of Horses for Sources outsourcing advisory firm,
Christoph Prieler: Offshoring Executive, Managemen Consultant, University lecturer
Magdalena Szarafin - Chairman of IFRS Practice Committee at German CPA Society
Boris Kontsevoi - Founder and President of Intetics Co.

Trend 1. Shortage of IT specialists in developed economies

The publication of the “CEE IT Outsourcing Review 2010” coincided with the series of studies “Nearshore as a solution to EU labor shortage” conducted by Nearshore blog this month. Similarly to our predictions the study “CEE IT Outsourcing Review 2010” together with the expert panel paid a great deal of attention to the growing shortage of IT specialists in the developed economies which might develop into a dangerous brake on post-recession recovery and innovation in developing economies.

One of the study experts Franco Dal Molin indicated:

In a number of West European economies there is – despite the crisis – still a significant shortage of skilled IT specialists. Finding developers and hiring them fast enough becomes often more crucial than just lowering costs. Finally, in times of uncertainty and volatility, outsourcing is looked at as an ideal way to become more flexible and/or scalable.

The survey trends summary reflected that increase in skilled specialists shortage is among TOP 10 region’s main trends with 32 per cent of survey respondents indicated it as the major trend.

Trend 2. Growing IT workforce - Romania and Ukraine leaders

From other side the study indicates a continuing increase in the number of employed specialists
working in the Central and Eastern European IT services market throughout 2009. The higher education that formed the base of educational systems in former Soviet Union countries experiences a further improvement of their already strong focus on fundamental engineering education.

This is one of the most important factors contributing to the preparation of qualified specialists in the industry. The presence of strong science schools and further education system conversion, fueled the rapid increase in the number of companies providing IT outsourcing and software development services in the CEE region.

In 2009, the number of IT specialists employed in companies providing IT outsourcing and software development services in the CEE region reached 95,000. Romania and Ukraine led in growth in the number of IT specialists with 12.33 and 9.51 per cent growth.

Trend 3. CEE IT Outsourcing Market Growth

The most prevalent trend in 2009 was the increase in the volume of IT outsourcing services
provided. The volume of work exported in 2009 indicated a noticeable growth in comparison to
the findings of the ‘CEE IT Outsourcing Review 2008’.

The general volume of IT outsourcing and custom software development services exported from
the CEE region reached USD $4 billion in 2009. The largest growth took place in Romania and
Ukraine. These two leaders invariably show high rates of market growth and leave other countries far behind in terms of the volume of IT outsourcing services exported. Hungary, Poland, Belarus, Czech Republic and Bulgaria close out the list of leaders.

Outsourcing services providers are quite optimistic about their development prospects for 2010. Respondents from all countries forecast 10%-30% growth depending on specific circumstances at work within each individual country.

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.

Trend 4. More market players despite crisis

Rather interesting trend might be observed from the study statistics on the number of companies within the region. As reasonably one might have thought about decrease in the number of companies throughout economic meltdown the actual figures are quite opposite.

Not only no significant bankruptcies, closures or IT outsourcing company failures were reported during 2008-2009, in fact 20% of responding companies were established during that period. These were mainly small-sized companies established in times of negligible redundancy at the
end of 2008 through the beginning of 2009. Many of these companies also were the result of
business restructuring when service companies shifted to independent organizations.

Trend 5. The EU - US outsourcing spending race will continue

Last year TPI’s sweeping report marked that Europe outran US in terms of IT outsorcing spending. The report indicated that EU businesses signed a record number of IT outsourcing contracts in 2009 and beat US in terms of Total Contract Value (TCV). By the end of the third quarter of 2009, G2000 companies headquartered in Europe were spending more on outsourcing deals overall than G2000 firms with headquarters in the US and Canada.

The study surveyed the expert panel on the further dynamics in this competition. While most experts agree on the difference in economic cycles between EU and US being the main driving force in this competition, some respondents indicated the gap in IT and telecom between US and EU which can be a motive for European companies to spend more to make up the distance missing.

In a further perspective experts associated dynamic with the size of economies. Since USA and Canadian economies is just about 7% bigger than EU economy, the outsourcing spending of both regions, especially long-term, to smooth out saturation effects, should be about the same.

Trend 6. Nearshoring strengthen its positions at global arena

The Key Conclusions chapter within the study signals that software development and IT outsourcing services provider industry in Central and Eastern Europe successfully overcame all of the challenges of the recession of 2008 and resumed its previous trajectory of growth.

The main drivers behind this dynamic experts named the numbers of long-term contracts and big clients who transferred their projects on software development to their CEE outsourcing partners.

The expert panel came to agreement that such a trend closely associates with the growing notion about outsourcing as a people’s business where geographical, cultural and language proximity are of importance for buyers. Sourcing buyers survey shows that customers from Western Europe are likely to make business with partners from Central and Eastern Europe as their locations are available within 2-3 hours, their business partners speak their languages. They are high-qualified тв the prices are still lower than those in Western Europe.

The panel indicated a growing significance of nearshoring at the global outsourcing arena. As new stratums of businesses, especially mid-size businesses, are coming to outsourcing market, they feel more comfortable to work with nearshore providers.

Additionally, similar time zones and physical proximity promote more efficient operations. A noteworthy and interesting side effect of this is acquisition of Latin American and East European providers by Indian companies.


In 2009, the software development and IT outsourcing services provider industry in Central and Eastern Europe successfully overcame all of the challenges of the recession of 2008 and resumed its previous trajectory of growth.

The industry used the recession time to reorganize internal business processes within companies, to optimize costs, and to further develop more qualified operational business management processes

Such rapid recovery by the industry, and resumption of its previous growth rates, are testament to the strength and solid prospects of the business model used by Eastern European outsourcing companies in their strategic development.

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.

The material prepared by Nearshore Blog in conjunction with Levi9 Global Sourcing based on informational sources of CEEOA (http://ceeoa.org).

Levi9 Company Profile might be found on the pages of the study within the Partners Section. The study can be accessed on (http://itonews.eu)

Keeping up with Nearshore expansion - regional sub-groups to our group in LinkedIn

Dear Readers,

As we've been written in our previous posts "it's time to Nearshore", it's time to explore the unique opportunities provided by the optimal outsourcing model which has become the result of years of researching and practicing by businesses and practitioners from around the globe.

Although Nearshoring has been mainly associated with the European continent we saw an astronomical emergence of the practice on the lands of Western Hemisphere. Where escalating uncertainties and regional threats of the main offshore destination combined with increased focus on vulnerability management and demand to keep data close have changed delivery preferences of US businesses towards nearshore and sameshore options.

Nowadays, Nearshoring is a main outsourcing buzzword in Latin America, the region considered to be the main nearshoring destination for US. Recently the region held a prestige ranking contest "The Nearshore Americas Power 50" naming the most influential Nearshore figures from 16 countries from Americas region.

All this confirms the expansion of the Nearshoring across the world borders which, we personally think is rather reasonable :)

That said, we'd like to introduce the regions sub-groups in our sister LinkedIn group "Nearshore Professionals". You're very welcome to join!

The shortage of IT specialists in EU - predictions, solutions, consequences.

In the last decade, an increasing demand for high skilled hi-tech workers and engineers could be observed in most EU leading economies. From this point the ability of national education system to supply businesses with qualified specialists seen as crucial in driving post-recession growth and innovation.

Paradoxically enough, but the growing importance of IT coincide with rather different trend in education where popularity of hi-tech trades in falling swiftly. Result local institutes and universities do not produce enough qualified graduates while at the same time aging generation of old-school engineers comes to retirement.

What might be seen as a solution to the growing shortage of specialists, namely immigration and internalization of labour stumbles on the growing multiculturalism and immigration issues in most of Europe.

Based on this we conducted series of studies aimed to identify the current state of things on EU labor markets, main trends and solutions which can pick up the pluck on the growing shortage of hi-tech specialists.

The strategy of choice appeared as Nearshoring - as it provides two-way benefits to EU businesses - from one side enabling to access much-needed resources, while helping to explore and expand to developing neighbouring markets using local expertise of nearshore providers.

To bring this topic up and find out opinion of our readers and members of sister Nearshore Professionals Group on Linkedin we started series of discussions and pools (on the right side of this blog) where you can express your take on this problem, its solution and future trends.