The CIO of the Year Award aims to give recognition to the best performing CIO in that year. The CIO of Year 2011 is expected to have shown constant top performance in running the IT function, achieving major improvements to the business or even enabling new business models, delivering outstanding project results and being a recognized leader with vision and strong people management skills. We are looking for "The Most I5 Chief" as the CIO of the Year 2011!
This years Award will be presented on the CIO Day 2011 on the 15th of November 2011 by founder of Levi9 Bernhard van Oranje-Nassau.
Ukraine won ITO Destination of The Year Award 2011
It's finally happened! Ukraine has been recognized by outsourcing experts as the top destination for ITO in 2011. The country has won the nomination "Outsourcing Destination of The Year" in the frames of European Outsourcing Excellence Awards.
Over the last decade Ukraine has gained a huge interest from the western countries for provision of outsourcing services in the areas of Informational Technology. Country's IT sector saw a double-digit growth over the last 5 years finally reaching 1 billion value last year. Today, Ukraine is the world's fifth IT services exporter worldwide with the biggest labor pool in CEE region.
Many experts agreed that country's specific traits such as unique geographical location, cultural likeness, rich labor pool and strong scientific legacy coupled with cost-benefits provided by country's non-EU memberships will play a crucial role in shaping outsourcing landscape in the coming years.
At Nearshore Outsourcing Blog we believe this is a great next step for Ukraine and would like to thank our associates for nominating Ukraine for this Award. Nearshore Outsourcing Blog together with Ukrainian Hi-Tech Initiative provided an informational support for the nomination!Will Agile become the methodology of choice for large-scale software projects?
Late last year, Gartner predicted that by 2012 Agile development methods would be utilized in 80 percent of all software development projects. While small-to-mid-sized companies have witnessed vast successes from using an Agile approach, there is now a growing popularity in applying those same standards to enterprise-level software development efforts.
However, large-scale implementations may involve more comprehensive organization which in turn may influence flexibility and adaptability inherited in Agile. From this point do we need special practices to fit Agile for large-scale engagements?
Appreciate your insights as well as real-world case-studies of large-scale Agile implementations here in comments or join our discussion in LinkedIn
Please, also read our latest work - Agile and Nearshore - Formula to Successful Software Development
However, large-scale implementations may involve more comprehensive organization which in turn may influence flexibility and adaptability inherited in Agile. From this point do we need special practices to fit Agile for large-scale engagements?
Appreciate your insights as well as real-world case-studies of large-scale Agile implementations here in comments or join our discussion in LinkedIn
Please, also read our latest work - Agile and Nearshore - Formula to Successful Software Development
Dutch IT Outsourcing landscape looks healthier in 2011
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%.
This excerpt from the key findings of the the Dutch IT Outsourcing (ITO) survey 2011 conducted by a UK-based research firm IT Sourcing Europe reveals an across-the-board trend in Netherlands - more Dutch companies began to source their software development or other elements of IT to nearhsore, sameshore and offshore providers comparing to the last year results.
The major trends reflected in the survey demonstrate that in 2011 the Dutch ITO landscape looks healthier and more mature compared to the 2010 indications.
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 go with dedicated / virtual teams located nearshore to complete the projects (up 34% from 2010)
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.
Levi9 confirms this trend achieving exceptional results with its key customers by delivering innovative solutions through its dedicated nearshore centers in Serbia, Romania and Ukraine. This year Levi9 partner OnGuard has won a prestige award of the “Most Innovative ICT Company 2011 in Netherlands”.
This excerpt from the key findings of the the Dutch IT Outsourcing (ITO) survey 2011 conducted by a UK-based research firm IT Sourcing Europe reveals an across-the-board trend in Netherlands - more Dutch companies began to source their software development or other elements of IT to nearhsore, sameshore and offshore providers comparing to the last year results.
The major trends reflected in the survey demonstrate that in 2011 the Dutch ITO landscape looks healthier and more mature compared to the 2010 indications.
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 go with dedicated / virtual teams located nearshore to complete the projects (up 34% from 2010)
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.
Levi9 confirms this trend achieving exceptional results with its key customers by delivering innovative solutions through its dedicated nearshore centers in Serbia, Romania and Ukraine. This year Levi9 partner OnGuard has won a prestige award of the “Most Innovative ICT Company 2011 in Netherlands”.
Research Completed! Agile and Nearshore - Formula to Successful Software Development
"It's time for software professionals to stop sitting on the fence where agile is concerned.
Forrester Report 2009
Nearshore Blog is extremely pleased to present our new research work - "Agile and Nearshore - Formula to Successful Software Development".
The paper is accessible with this link and represents a great deal of our efforts aimed at giving a broad overview of Agile development methodologies and their practical appliance in commercial software development.
The study analyzes the history of Agile development, discusses the main changes occurred in commercial software sector over last years and presents real-world case-studies and successful implementation of Agile methodologies in conjunction with Nearshore delivery approaches.
The study features successful implementations of Agile for software product companies “Borland” and "OnGuard", large ICT multinationals “British Telecom” and professional ITO service providers “Levi9 Global Sourcing”.
We would like to draw your particular attention to the Levi9 case-study, being a commissioner of this research the company managed to successfully craft these two elements of successful software development into one robust approach! This approach allowed to develop exceptional solutions at a shorter time which in turn helped Levi9 customer to clinch the Award of Most Innovative IT Company 2011 in Netherlands.
Since this work represents first of its kind we'll be very pleased for your support and feedback!
Since this work represents first of its kind we'll be very pleased for your support and feedback!
Sincerely Yours - Nearshore Blog Team!
IT event in Netherlands not to be missed - Windows Azure Platform for success?
"Windows Azure platform for success?" is a key message of planned seminar and round table session to be held at Microsoft Netherlands facilities (Evert van de Beekstraat 354 1118 CZ Schiphol) on 10th of May 2011.
To register for seminar please visit our "Event page" or "Linkedin Events"
About Azure
Among the main benefits of Azure there are
- Increased speed to value: accelerated development and deployment time by up to 70%
- Lower costs: economies of scale through the shared use of cloud infrastructure
- Improved Flexibility: scaling of computing and infrastructure resources exactly when it needed
- Enhanced functionality: existing products can be expanded with cloud-based functionality or SaaS versions can be created
- Modularity: consumption-based pricing and user-targeted functionality on demand
Levi9 - Your Guide to Cloud
Levi9, in close partnership with Microsoft and Information Navigator, one of the first in Netherlands started leveraging the Azure platform to help integrate cloud computing into hi-tech solutions and strategies.
Experienced specialists from the Microsoft, Information Navigator and Levi9 will present real-world experience building Cloud strategy to achieve desired business objectives.
Read more on the registration page.
KPMG Report - Ukraine New Emerging Outsourcing Destination
IT-BPO Scenario in the country
ICT, high-tech and consumer electronics are priority sectors of Ukraine’s national FDI
strategy. The ICT market has grown constantly during the last six years. Since 2000, Ukraine has become an attractive outosurcing destination in Eastern Europe providing software development services to clients in Western Europe and United States.
Today, Ukraine is the world’s fifth biggest IT services exporter and has the highest outsourcing market volume in Europe. The country’s IT sector demonstrates the fastest-growing rates and predicted to exceed 1 billion value in 2011.
The main outsourcing activity concentrated in the capital of Ukraine, Kiev and second-tier regional centers with population up to 1 million, such as Lviv, Kharkiv, Dnepropetrovsk, Donetsk, Odessa.
The respective KPMG IT Advisory Report, can be found here, gives an overview of the Ukrainian IT scenario and explores Lviv as an attractive ITO destination.
More information about the city of Lviv can be found in our special section EURO 2012 Journey by Ukrainian cities
ICT, high-tech and consumer electronics are priority sectors of Ukraine’s national FDI
strategy. The ICT market has grown constantly during the last six years. Since 2000, Ukraine has become an attractive outosurcing destination in Eastern Europe providing software development services to clients in Western Europe and United States.
Today, Ukraine is the world’s fifth biggest IT services exporter and has the highest outsourcing market volume in Europe. The country’s IT sector demonstrates the fastest-growing rates and predicted to exceed 1 billion value in 2011.
The main outsourcing activity concentrated in the capital of Ukraine, Kiev and second-tier regional centers with population up to 1 million, such as Lviv, Kharkiv, Dnepropetrovsk, Donetsk, Odessa.
The respective KPMG IT Advisory Report, can be found here, gives an overview of the Ukrainian IT scenario and explores Lviv as an attractive ITO destination.
More information about the city of Lviv can be found in our special section EURO 2012 Journey by Ukrainian cities
Eastern Europe an Emerging Outsourcing Leader - a deep look!
Eastern Europe is more often named by many as an emerging outsourcing hotspot which is going to challenge world’s premier outsourcing destinations, especially for knowledge-intensive and innovative R&D and software engineering work!
Is it really going to happen? and if yes, what preconditions for this?
In our new series “Eastern Europe an emerging IT outsourcing leader”, we’ll try to answer some of these and other not less important questions.
But let’s get some things clear at first!
Post #1 - Two Meanings of The One Name
I picked up this example as there is some confusion in differentiation between outsourcing destinations in general and IT outsourcing destinations in particular.
To clarify this I’d like to take example with “car” - as this word may have some imaginative similarities in this respect. The word car can be used to describe both a sedan and a big truck, when speaking of the car we can mean them both, right?
Well, in this case the question to these car owners - “can you help me to move my belongings to new flat?” will be differently considered. Same story with IT outsourcing, as in metaphorical comparison such outsourcing trucks as “India” and “China” can completely move company’s belongings while such sedans as East European countries can move some compact or fragile parts at a time.
Let’s expand this thought a bit more, let’s see the moving process in this way - the India truck can move everything, but in a bulky way making you feel a bit concerned over the road, while Eastern sedan taking just some parts gives you control. See it is more about specialization :)
That said, indeed, Central and Eastern Europe is an emerging destination for IT outsourcing, and have been considered so for the last decade. But the competition with BRIC countries is rather illusive and might be considered seriously only in selective yet very crucial areas of IT outsourcing umbrella.
What does it mean?
Eastern European has always been considered as destination of choice for complex, knowledge-intensive software engineering and R&D projects, requiring in-depth expertise and innovation.
With solid scientific legacy and strong technologically-oriented education system (with only 1% of world’s population Ukraine has 6% of the world’s scientists) Eastern Europe appeared as a perfect choice for desperately seeking technological brain Western hi-tech innovators.
Apart from one-stop-shop outsourcing destinations such as India and Philippines featuring high-level of English penetration and abundant talent pool of various types of trades Eastern Europe since the first day was associated with the word “technology and engineering”.
Thereby, the lion share of the portfolio of IT outsourcing services provided by companies from Eastern Europe mainly composed of services related to software engineering and product development, while India, Philippines and China’ IT offerings largely mixed with data processing & support related offerings such as data management, IT support, system administration and others.
Where it came from?
Having well-developed scientific research and space industries the Soviet Union needed an efficient and productive education system able to cope with the growing demand for engineering brain.
The popularity of engineering and scientific professions has been spread throughout then-occupied and allied Eastern countries, thousands of universities and faculties have been opened setting a mark for high-quality technical education.
Andre Geim 2010 Nobel Physics Prize winner about Soviet Union education - You cannot obtain such an education, not in Harvard nor in Cambridge, nowhere!
Subsequently, all that brought an incredible progress in electronics and technology science making Eastern Europe a viable resource for immigration resources of Western countries. Providing some statistics, there were millions of engineers, scientists and mathematicians migrating to the US and Europe, during and after the collapse of Soviet Union. Then Polish immigrants, made a huge contribution to the UK labor market after joining to EU.
Thanks to cultural, historical and religious affinities, scientific and education potential immigrants from Eastern Europe saw a warm acceptance in their new whereabouts leading the innovation and technological advancement in United States and Europe. Several examples of this fact: Google with its founder Sergey Brin, two Nobel Prize Winners, physicists Andre Geim and Konstantin Novoselov and many others.
This fact not only spread the reputation of Eastern Europe as a mine of technological and scientific talent, but predetermined the whole course of the future industry. Eastern Europe’s colossal pool of engineers, scientists, mathematicians proved to be a magnet for foreign companies seeking technological brains.
After the collapse of Soviet Union in many member states rocket building facilities and scientific bases were re-qualified for providing commercial hi-tech services and products. Since early 1990s various organizations have been formed on the facilities of technical universities and scientific laboratories to provide assistance in complex R&D areas.
Back to 1991, the Swiss software innovators came to Ukraine for technological competence and signed what is known as the first outsourcing contract signed in Eastern Europe.
It was exactly the group of scientists from the Kiev Institute of Cybernetics, nowadays known as Levi9 Ukraine, which provided technological supervision for the development of large-scale object-oriented system which subsequently earned its owners TOP100 Manufacturing Software Firms Award.
What does it mean? - Part II. Innovation Outsourcing
Well, basically it means that although Eastern Europe is considered as a competitor to world’s top outsourcing clusters such as BRIC for the provision of whole range of IT outsourcing services this general competition term is rather illusive and argumentative.
There is a huge gap in terms of market revenue and labor pool between India, China and Eastern Europe, and even considering the stunning 23 percent growth rate for IT export in Eastern Europe its still far behind the so-called competitors’ indicators.
Another trend, however might be observed in the niche of software engineering and R&D areas as previously indicated 23 percent of growth mainly distributed between these to backbones of Eastern European IT export market, with countries such as Ukraine and Romania doubled their export of software development services.
Innovation outsourcing to Eastern Europe is booming and big internationals such as Siemens and Deutsche Telekom already gave a preference to Eastern European providers to source their innovation and knowledge-intensive activities.
In the next part we will discuss:
1. Factors that might influence alignment of forces in IT outsourcing:
The EU - US outsourcing race
Last year European Union outspent US for IT Outsourcing contracts for the first time benefiting Eastern Europe as a regional cluster for Western Europe.
Beginning of 2011 was marked by the quick start of US economy, while EU faced currency crisis and economic recession in its second-tier member countries. This may have a bearing on the spending figures.
Nearshoring Trend
Nearshoring is a main trend in today’s outsourcing arena. Similar time-zones, physical proximity and cultural affinity proved to be as important outsourcing drivers as cost-savings and technological competence.
Increased focus on vulnerability management as well as shift in outsourcing delivery preferences to nearshore and sameshore can help nearshoring destinations such as Eastern Europe to profit from nearshoring advantages in their specific clusters.
Egypt Crisis - will it change outsourcing landscape in the region?
Direct competitors of Egypt's Red Sea coastline such as Turkey, Spain and others are getting benefits of busy beaches and flows of tourists as last have turned their back after several weeks of anti-government protests that forced president Hosni Mubarak to flee the country.
What about Outsourcing?
Some acclaimed experts already expressed their cautions with regards to perspectives of Egyptian outsourcing industry unless the situation stabilize soon. For the last several years Egypt’s outsourcing services industry demonstrated dynamic growth getting fame as a hotspot for global outsourcing.
In 2009, Egypt for the first time has joined joined Gartner's alphabetically-ranked annual list spelling out the world's top 30 leading locations for outsourcing services. One of the main treats of such a progress has been named Egypt’s government extensive support and liberalization of tax regime for ICT. Egypt received enormous support from the government, particularly in the ICT industry with a reported $2 billion investment in its telecommunications infrastructure.
This crisis might be a heavy blow to Egypt perception at the international outsourcing arena as despite its robust progress and high rankings, the country has a number of weaknesses among which most notorious - negative business perception.
An LSE Outsourcing Unit in its study “Beyond BRIC” noted that Egypt still suffers from a negative perception and a belief that it is a country regularly targeted by terrorists and government disputes.
From the history one might notice what role perception plays in such industry as IT outsourcing. As a perfect example India’s terrorist events and corruption scandals in 2008 which have irreversibly changed risk/rewards calculations in the whole outsourcing industry pushing India in its own outsourcing crisis.
Alignment of forces in the EMEA region
Egypt has been considered for years as a bridge between Europe, Middle East and Africa. The country has been competing with Morocco and East Europe for European clients, mainly from UK, France and Spain and was looking to expand its reach to Benelux market (Netherlands, Belgium and Luxembourg). The country has been positioning itself as a nearshore destination to Europe, following the growing nearshoring trend in the region and jumping on the bandwagon of Central and Eastern European cluster.
In its report “2009: The Year of Outsourcing Dangerously” the Black Book of Outsourcing included Egypt in the list of safe locations for operating with low downstream risk leaded by Central and Eastern Europe and Latin America, while the entire Africa region was recommended to be avoided.
However, the current crisis and its possible developments can have a detrimental effect on country’s outsourcing gains of past years. As in response to precarious conditions conservative and consensus-driven Europeans might not include Egypt in the list of preferable outsourcing destinations keeping short-sighted nearshore precedency.
Moreover, other emerging outsourcing hotspots such as Serbia, Romania, Ukraine and Belarus are on the track to grow their positions as leading locations for offshore/nearshore services placing a significant emphasis on IT and business process services providing a vehicle to their economic growth.
For Egypt there is everything still to play for and - we hope - its government will not forget lessons learned previously reacting in good faith and on reasonable grounds so to prevent disaster that will be remembered by next generations.
Nearshore Study. What defines the nearshore zone?
The aim of this paper is to analyze the changes occurred in IT outsourcing industry,
point out to the current and future trends and clarify belonging criteria of the co-called nearshore zone.Quote from the study
"However, not only has the number of known nearshore sites have grown significantly over the last years, but the amount of advertising and promotion on behalf of country developers has skyrocketed.
From exotic to socially downtrodden areas, business dealmakers from around the globe compete for a slice of the billions dollar nearshore pie."
Contents
Shift in Delivery Preferences
Nearshoring, often referred as Nearshore Outsourcing took a wild ride during last years. The global political, economical, social and security changes during last years have a substantial impact on outsourcing industry at the international level.
The realities of an unsafe world have fully overrun into outsourcing decisions. The challenging component of outsourcing governance has shifted to mitigating downstream risk by determining the best location choice for their organizational processes.
As the savings gap between India and other world locations sunk to less than ten percent the value proposition is now more tempered more by potential threats. Increased focus on vulnerability management as well as geographical proximity has made for a shift in delivery preferences towards nearshore and sameshore options.
The survey made by Black Book Research in 2009 indicates that Central and Eastern Europe along with Latin America are viewed as significantly less dangerous outsourcing locations for US and EU respectively that all major hubs of India and being marked as the top destinations for operating with lowest downstream risks in 2009-2010. According to research having centers nearshore and sameshore will be a major client priority during next years.
Nearshoring - The Growing Trend
clusters based in North America, Europe and Asia.
However, not only has the number of known nearshore sites have grown significantly over the last years, but the amount of advertising and promotion on behalf of country developers has skyrocketed.
From exotic to socially downtrodden areas, business dealmakers from around the globe compete for a slice of the billions dollar nearshore pie.
While there are some proven nearshoring destinations such as Canada, Central and
Eastern Europe and Latin America that according to analysts represent a viable
alternative to offshore options for US and West European countries there are many
other locations that seems to follow the trend and claim to be nearshore locations as
well. So, what criteria can be used to define location as a nearshore?
What defines the nearshore zone?
Definitions vary as to what qualifies as a nearshore location. Duncan Aitchison
international managing director of TPI, does not get hung up on semantics, but claims that moving across a close country border without crossing an ocean is a good way to define a nearshore contract. But how close?
Tony Virdi, partner at outsourcing advisory firm Atos Consulting puts it at anywhere
within three and a half hours' flying time, meaning Canada, most European and Latin America destinations qualify. However, flight from New York to Mexico takes more than 5 hours, should it still be considered as a Nearshore?
In truth, nearshoring locations should sit along a spectrum of potential outsourcing sites. At one end sit the far offshore locations such as India and China, separated by both cultural and geographic distances while from other side will be onshore locations such as Ireland and some US cities.
Geographical factor however is not only one determining "nearshority" as there are
many other important aspects such as linguistic and cultural ties, common history,
similarity of education, directness of communication and visa relations.
All this factors should be carefully considered in order to determine the best location fit for an organization prior to start a comprehensive assessment of locations infrastructure, intellectual property and business protection, laws, regulations and labor potential.
From exotic to socially downtrodden areas, business dealmakers from around the globe compete for a slice of the billions dollar nearshore pie."
Contents
- Shift in Delivery Preferences
- Popular Trend
- What defines the nearshore zone
Shift in Delivery Preferences
Nearshoring, often referred as Nearshore Outsourcing took a wild ride during last years. The global political, economical, social and security changes during last years have a substantial impact on outsourcing industry at the international level.
The realities of an unsafe world have fully overrun into outsourcing decisions. The challenging component of outsourcing governance has shifted to mitigating downstream risk by determining the best location choice for their organizational processes.
As the savings gap between India and other world locations sunk to less than ten percent the value proposition is now more tempered more by potential threats. Increased focus on vulnerability management as well as geographical proximity has made for a shift in delivery preferences towards nearshore and sameshore options.
Nearshoring - The Growing Trend
This shift in delivery preferences allowed many destinations under the so-called
Nearshoring umbrella to profit from their geographical advantages in their specificclusters based in North America, Europe and Asia.
However, not only has the number of known nearshore sites have grown significantly over the last years, but the amount of advertising and promotion on behalf of country developers has skyrocketed.
From exotic to socially downtrodden areas, business dealmakers from around the globe compete for a slice of the billions dollar nearshore pie.
While there are some proven nearshoring destinations such as Canada, Central and
Eastern Europe and Latin America that according to analysts represent a viable
alternative to offshore options for US and West European countries there are many
other locations that seems to follow the trend and claim to be nearshore locations as
well. So, what criteria can be used to define location as a nearshore?
What defines the nearshore zone?
Definitions vary as to what qualifies as a nearshore location. Duncan Aitchison
international managing director of TPI, does not get hung up on semantics, but claims that moving across a close country border without crossing an ocean is a good way to define a nearshore contract. But how close?
Tony Virdi, partner at outsourcing advisory firm Atos Consulting puts it at anywhere
within three and a half hours' flying time, meaning Canada, most European and Latin America destinations qualify. However, flight from New York to Mexico takes more than 5 hours, should it still be considered as a Nearshore?
In truth, nearshoring locations should sit along a spectrum of potential outsourcing sites. At one end sit the far offshore locations such as India and China, separated by both cultural and geographic distances while from other side will be onshore locations such as Ireland and some US cities.
Geographical factor however is not only one determining "nearshority" as there are
many other important aspects such as linguistic and cultural ties, common history,
similarity of education, directness of communication and visa relations.
All this factors should be carefully considered in order to determine the best location fit for an organization prior to start a comprehensive assessment of locations infrastructure, intellectual property and business protection, laws, regulations and labor potential.
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)?
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.
Solution?
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".
Thanks!
“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.
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).
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 regionContents
Introduction
About CEE Review
Trends Confirmed!
- Trend 1. Shortage of IT specialists in developed economies
- Trend 2. Growing IT workforce - Romania and Ukraine leaders
- Trend 3. CEE IT Outsourcing Market Growth 4
- Trend 4. More market players despite crisis 4
- Trend 5. The EU - US outsourcing spending race will continue
- Trend 6. Nearshoring strengthen its positions at global aren
- Summary
Introduction
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.
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.
Summary
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)
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
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.
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.
Nearshore Study Part II. Netherlands - European leader in IT innovation
The study is conducted by the Nearshoring Blog in conjunction with Levi9 Global Sourcing to analyze the issues of the EU leading economies associated with the lack of qualified IT specialists as well as existing labor restrictions and multicultural problems that slowdown countries innovation and post-recession recovery.
The issue of this series coincides with the first international report on shortage of IT specialists published by UNESCO in October 2010. The report features escalating demand for engineering talent across the EU as well as indicates serious shortage of engineers in most sectors.
The Nearshore study. Part II Netherlands - European leader in IT innovation
The second part of study concentrates on the Netherlands. The Dutch economy is among leaders in innovative activity and highly relies on the hi-tech sector. From this point the ability of Dutch economy to supply businesses with highly-qualified resources seen as a crucial prerequisite for post-recession recovery and further economic growth.
With this aspect in mind we decided to concentrate the second part of our study on the potential of Dutch IT service market, its needs in terms of supply of highly-qualified IT specialists and current labor regulations and multiculturalism issues preventing Dutch businesses from immigration of foreign work and as a result slowdown in growth and post-recession recovery.
Please note: The following chapters present the first part of the study content providing details of the analysis of Dutch IT service market as well as current trends and issues on the labor market, and its ability to meet the demand for hi-tech specialists.
The full paper can be accessed by following this link or in “researches” section of our blog.
Major trend
In the last decade, an increasing demand for high skilled hi-tech workers and engineers could be observed in most the EU leading economies. This development has been associated with the development of increasingly integrated labour markets and the appearance of skill-biased technological change which is often ascribed to the acceleration of technological developments in the information and communication technology (ICT).
In the first chapter of this series we examined the current situation on IT labor market in Germany - the EU largest economy and world’s leading exporter along with its effect on further economic growth.
The study confirmed that German economy and labor market experience rather opposite trends:
- from one side there is a booming demand for German goods and services, particularly from Asia, which result in growing trade surplus and customer confidence
- from another part Germany experiencing a real labor crisis. Market surveys indicate that the country is in desperate need for skilled specialists and engineers with overall 400 000 positions unfulfilled only in IT
The survey conducted for famous German IT sector magazine revealed that a high percentage of businesses questioned for the poll said they had declined contracts during the first half of 2010 because they did not have enough staff to take on the extra work.
Businesses cannot fill open jobs with suitable candidates and the lack of labour is developing into a dangerous brake on growth, particularly for small and medium-sized companies,” said Marie-Christine Ostermann, chairwoman of the employers’ association Young Businesses-BJU, which co-commissioned the survey.
Data on similar trends has been observed in other EU developed economies such as France, UK and the Netherlands. Especially the latter, as the Netherlands is one of European leaders in technological innovation and world’s largest exporter of IT services and chip manufacturing.
Netherlands - European leader in IT innovation
The Netherlands can fairly be considered as a hi-tech engine of the European Union. The following facts just prove this statement:
- Some 70 percent of all innovation in the Netherlands is IT-related. The country is a world’s leader in ICT patent applications with more than a half of all patents submitted by Dutch companies and organizations are related to hi-tech sector.
- The country is a world’s fourth-largest exporter of IT related services with software sector contributes annually 17.3 billion euros to the Dutch economy
- Netherlands is a world’s leader in embedded systems and a world leader in chip manufacturing equipment
- The country is one of the most 'wired' countries in the world, with broadband network is the second-highest in Europe and over 90% of Dutch households have a computer
Apart from all this the country boasts of the region’s most advanced infrastructure and hosts a number of high-capacity networks used for R&D purposes, thereby providing platforms for global software developers, hardware companies and IT consultancies.
Shift to Service Model
Such progress in information technology along with increasing role in Europe’s business and scientific areas contributed to the further shift of Dutch economy from the production to the service based.
IT services became more tradable and Dutch IT sector achieved a record growth of 4.2 percent in 2007, exceeding GDP and average European IT industry growth of 2.9 percent, with the software sub-sector showing growth of 9.5 percent. IT market in the Netherlands experienced a fast growth over last decade developing in a 30 billion market already in 2007.
Demand for hi-tech specialists
Rapid technological advances and increasing use of information and communications technology (ICT) have increased demand for skilled labour dramatically. Before the crisis, Dutch IT industry employed over 255,000 people; or 3.5 percent of the total workforce.
Demand for information technology workers in the Dutch services sector continued to grow despite the crisis. The industry labor market surveys showed that IT specialists have become a hot property in the Netherlands because too few young people entered the field over the last decade and national educational system cannot meet the demand for hi-tech specialists.
As it was indicated in the first part of the study the Netherlands follows similar to Germany trend where hi-tech and engineering trades falling in popularity. Contrary to
the country’s growing role in Europe’s IT innovation young population in the Netherlands is not rushing to get IT education.
“The decline in engineering’s popularity among students is apparently due to a perception that the subject is boring and hard work, and engineering has a negative environmental impact, and may be seen as part of the problem rather than the solution,” explains Tony Marjoram, the Report Magazine editor.
Despite the high salaries in the sector the image of hi-tech professions still stays at the relatively to other sectors low rank in the Netherlands. As 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.
With overall shortage of hi-tech specialists and engineers comes to 1.2 million in the EU - based on data provided by European Round Table of Industrialists - the Netherlands together with Germany, France and UK responsible for a lion share of that shortage.
Please note: The previous chapters presented only the first part of the study content. The full paper can be accessed by following this link or in “researches” section of our blog.
Nearshore Study Part II. Netherlands - EU leader in IT innovation
Dear Readers,
The Nearshore Blog team is extremely pleased to announce about the completion of the second part of our "Nearshoring to Eastern Europe as a solution to the EU labor shortage" studies series. The work is almost finished, and the study is in the pipeline :)
Hot on the heels of welcoming reception of the first part of the studies "Germany - EU largest economy needs 400,000 high-tech specialists" we concentrated our investigative efforts on analyzing another European leader in IT sphere - the Netherlands yet native land for Nearshore blog!
The Dutch economy is among world leaders in innovative activity and highly relies on the hi-tech sector. From this point the ability of Dutch economy to supply businesses with highly-qualified resources seen as a crucial prerequisite for post-recession recovery and further economic growth.
With this in mind we dedicated the second part of our study on the potential of Dutch IT service market, its needs in terms of supply of highly-qualified IT specialists and current labor regulations and multiculturalism issues preventing Dutch businesses from immigration of foreign work and as a result possible slowdown in growth and post-recession recovery.
As a solution to the growing shortage of IT talent the study considers nearshore outsourcing and staff augmentation services from Eastern Europe.
The study paper is expected to be accessible within the weeks and Nearshore Blog is thankful for all your support and help!
The Nearshore Blog team is extremely pleased to announce about the completion of the second part of our "Nearshoring to Eastern Europe as a solution to the EU labor shortage" studies series. The work is almost finished, and the study is in the pipeline :)
Hot on the heels of welcoming reception of the first part of the studies "Germany - EU largest economy needs 400,000 high-tech specialists" we concentrated our investigative efforts on analyzing another European leader in IT sphere - the Netherlands yet native land for Nearshore blog!
The Dutch economy is among world leaders in innovative activity and highly relies on the hi-tech sector. From this point the ability of Dutch economy to supply businesses with highly-qualified resources seen as a crucial prerequisite for post-recession recovery and further economic growth.
With this in mind we dedicated the second part of our study on the potential of Dutch IT service market, its needs in terms of supply of highly-qualified IT specialists and current labor regulations and multiculturalism issues preventing Dutch businesses from immigration of foreign work and as a result possible slowdown in growth and post-recession recovery.
As a solution to the growing shortage of IT talent the study considers nearshore outsourcing and staff augmentation services from Eastern Europe.
The study paper is expected to be accessible within the weeks and Nearshore Blog is thankful for all your support and help!
Subscribe to:
Posts (Atom)