For quite a while, every outsourcing service provider has cited lower costs as a reason to outsource--the latest "news" is innovation as their key differentiators. But, what is their definition of "innovation"?
March 23, 2009 — CIO — I once heard someone say (actually that someone happened to be me!), "Offshore Outsourcing is dead!" But before you jump off your seat, let me clarify what I mean by dead. I mean dead not with reference to its importance, relevance or future; I mean dead with reference to its character—it is devoid of vibrancy, excitement, creation and innovation.
16 Ways IT Can Do Less with Less
Tough times call for tough measures. Layoffs and cutbacks are rampant. Even if your IT budget is relatively stable, you will probably be asked to do more with less. Read what CIO.com has to say about it.
Feel also free to call us and we will reduce your IT spend with over 30% without "doing less".
Feel also free to call us and we will reduce your IT spend with over 30% without "doing less".
IT Outsourcing in Central and Eastern Europe 2009
The alignment of forces in Global Outsourcing Industry will change, there is no doubt about it. There is some dominant reasons further to big changes:
- Current economic crisis swept the global markets and already hit the IT industries around the world. In this tough environment organizations have to carefully weigh all benefits and risks of sending work to outsourcing providers as well as once again reexamine what might be outsourced and what should stay in-house.
- Recent scandals in Indian IT outsourcing markets where service providers are losing their advantage against global competitors for providing IT outsourcing services as customer satisfaction levels fall (satisfaction with Satyam declined 15%, TCS dropped 8% and Wipro fell 4%)
- Europe has a record number of contracts were signed during last year and finally outruns US for outsourcing deals in 2008, despite a 50 per cent fall in the value of deals in the second half of the year
- Recent Gartner's report of TOP30 outsourcing destinations claims that BRIC (Brazil, Russia, India and China) dominated as offshore leaders in 2008, but it has also marked the rise of new outsourcing destinations as well as well scoring of CEE countries. Because of India's higher IT staff turnover and recent horror stories companies are choosing offshore providers in Eastern Europe where language skills are better and outsourcing providers appear to have a more in-depth understanding of their clients than competitors farther east.
Partially or entirely, all those facts strengthened positions of Central and Eastern Europe region as a major player in the global IT outsourcing market in terms of market volume, the number of IT professionals and IT companies offering outsourcing services. Increasing demand of Nearshoring services is also caused by a general interest of EU companies in entering to the CEE market with a desire to cut costs by using local outsourcing resources during an entrance.
Indeed, CEE countries are still more expensive compared to their Asian competitors such as India or China. However, Gartner's outsourcing report claims that recent EU entrants Slovakia and Romania, together with Russia and Ukraine were scored well on cost grounds and the CEE region whilst far from homogenous, enjoys close geographical and cultural links, particularly with the Western European markets.
Although the country (Eastern Europe) currently taking third place after India and China, it promises to rise up in near future with such attractive offshore work centers as Russia, Ukraine, Czech Republic, Poland, Romania, Belarus and the Baltic. These destinations not only offer low cost skilled labor force, but also an attractive regulatory environment with a close proximity and cultural ties to Western Europe and US. The other advantages of moving to Eastern Europe offshore markets are connected to its political stability, while India has an ongoing conflict with Pakistan and Sri Lanka.
Eastern Europe has highly efficient school system that adds thousands of skilled labor every year to its professionals, for example The Soviet Union's solid legacy in the fundamental sciences provides students with a strong education in numerous technical disciplines. According to the GoalEurope, there are 30,000 IT graduates only in Ukraine every year. With government commitment to the industry there is highly skilled labor force with minimal socio-cultural differences found in CEE countries.
As quality becomes more important during this recessionary times and outsourcing is not Just a Way to Cut Costs Anymore, customer wants to get better business processes from outsourcing providers in order to increase customer satisfaction and save more money. It requires from outsourcing providers more in-depth understanding of their clients along with ability to go beyond the traditional outsourcing services.
- Current economic crisis swept the global markets and already hit the IT industries around the world. In this tough environment organizations have to carefully weigh all benefits and risks of sending work to outsourcing providers as well as once again reexamine what might be outsourced and what should stay in-house.
- Recent scandals in Indian IT outsourcing markets where service providers are losing their advantage against global competitors for providing IT outsourcing services as customer satisfaction levels fall (satisfaction with Satyam declined 15%, TCS dropped 8% and Wipro fell 4%)
- Europe has a record number of contracts were signed during last year and finally outruns US for outsourcing deals in 2008, despite a 50 per cent fall in the value of deals in the second half of the year
- Recent Gartner's report of TOP30 outsourcing destinations claims that BRIC (Brazil, Russia, India and China) dominated as offshore leaders in 2008, but it has also marked the rise of new outsourcing destinations as well as well scoring of CEE countries. Because of India's higher IT staff turnover and recent horror stories companies are choosing offshore providers in Eastern Europe where language skills are better and outsourcing providers appear to have a more in-depth understanding of their clients than competitors farther east.
Partially or entirely, all those facts strengthened positions of Central and Eastern Europe region as a major player in the global IT outsourcing market in terms of market volume, the number of IT professionals and IT companies offering outsourcing services. Increasing demand of Nearshoring services is also caused by a general interest of EU companies in entering to the CEE market with a desire to cut costs by using local outsourcing resources during an entrance.
Indeed, CEE countries are still more expensive compared to their Asian competitors such as India or China. However, Gartner's outsourcing report claims that recent EU entrants Slovakia and Romania, together with Russia and Ukraine were scored well on cost grounds and the CEE region whilst far from homogenous, enjoys close geographical and cultural links, particularly with the Western European markets.
Although the country (Eastern Europe) currently taking third place after India and China, it promises to rise up in near future with such attractive offshore work centers as Russia, Ukraine, Czech Republic, Poland, Romania, Belarus and the Baltic. These destinations not only offer low cost skilled labor force, but also an attractive regulatory environment with a close proximity and cultural ties to Western Europe and US. The other advantages of moving to Eastern Europe offshore markets are connected to its political stability, while India has an ongoing conflict with Pakistan and Sri Lanka.
Eastern Europe has highly efficient school system that adds thousands of skilled labor every year to its professionals, for example The Soviet Union's solid legacy in the fundamental sciences provides students with a strong education in numerous technical disciplines. According to the GoalEurope, there are 30,000 IT graduates only in Ukraine every year. With government commitment to the industry there is highly skilled labor force with minimal socio-cultural differences found in CEE countries.
As quality becomes more important during this recessionary times and outsourcing is not Just a Way to Cut Costs Anymore, customer wants to get better business processes from outsourcing providers in order to increase customer satisfaction and save more money. It requires from outsourcing providers more in-depth understanding of their clients along with ability to go beyond the traditional outsourcing services.
The 25 Most Dangerous Cities for Offshore Outsourcing
The pressure to reduce costs are increasing but where to outsource?
If you have an outsourcing contract for work in Bogota, Colombia, Bangkok, Thailand, or Johannesburg, South Africa, you should be aware that they rank as the riskiest offshore outsourcing destinations in the world. Locations in India and Brazil also made this inauspicious list. Where do you outsource?
After a year that saw terrorist attacks in Mumbai, kidnapping for profit in Mexico, and the unexpected meltdown of Satyam, one of India's biggest IT services firms, corporate America's cries for the CIO to get things done "better, faster, cheaper" offshore may begin to be drowned out by the more moderate mantra of today's outsourcing customer: "safer, more stable, more secure."
Eastern Europe is growing quite rapidly as the best destination.
If you have an outsourcing contract for work in Bogota, Colombia, Bangkok, Thailand, or Johannesburg, South Africa, you should be aware that they rank as the riskiest offshore outsourcing destinations in the world. Locations in India and Brazil also made this inauspicious list. Where do you outsource?
After a year that saw terrorist attacks in Mumbai, kidnapping for profit in Mexico, and the unexpected meltdown of Satyam, one of India's biggest IT services firms, corporate America's cries for the CIO to get things done "better, faster, cheaper" offshore may begin to be drowned out by the more moderate mantra of today's outsourcing customer: "safer, more stable, more secure."
Eastern Europe is growing quite rapidly as the best destination.
Krediet crisis; ict krijgt meer voor minder
Met een feestelijke CIO verkiezing nog vers in het geheugen is het contrast met de realiteit van alle dag groot. Lees verder
India losing its advantage in outsourcing
Indian IT service providers are losing their advantage against global competitors for providing IT outsourcing services as customer satisfaction levels fall. Satisfaction with Satyam declined 15%, TCS dropped 8% and Wipro fell 4%. Source http://www.computerweekly.com/
Less money-saving, more time-saving – Outsourcing Not Just a Way to Cut Costs Anymore
Companies are increasingly considering outsourcing as a time-saving tool for their core business processes during this recessionary times. So far, outsourcing was considered by the most as the money-saver in the first place and customers were happy to take a 20 per cent cost takeout from outsourcing deal. But today customer can take a 20 per cent cost takeout by reducing salary of his employees who will accept it just to save their jobs.
Today some see new slogan for outsourcing - efficiency, where customer wants to get better business processes from outsourcing providers in order to increase customer satisfaction and save more money.
One example of such modernization according to Suresh Vaswani, CEO of IT business at Wipro is to stream a company's collection process and cutting the time taken to bill clients. That reduction completely changes the game so far as the cash situation of the customer is concerned, and cash is king today.
Providing customers with modern systems such as client-oriented ERP/CRM platforms will allow them to control clients businesses better, cut the time for servicing, billing and optimize cash flow.
“But to do that company’s IT has to be adequately enabled, otherwise the processes cannot be changed appropriately” - stressed Vaswani.
Although outsourcing trends may change with this changing environment and outsourcing might acquire new watchword, businesses will continue to consider outsourcing as a main tool for cost-cutting and seek benefits from cheaper deals.
Today some see new slogan for outsourcing - efficiency, where customer wants to get better business processes from outsourcing providers in order to increase customer satisfaction and save more money.
One example of such modernization according to Suresh Vaswani, CEO of IT business at Wipro is to stream a company's collection process and cutting the time taken to bill clients. That reduction completely changes the game so far as the cash situation of the customer is concerned, and cash is king today.
Providing customers with modern systems such as client-oriented ERP/CRM platforms will allow them to control clients businesses better, cut the time for servicing, billing and optimize cash flow.
“But to do that company’s IT has to be adequately enabled, otherwise the processes cannot be changed appropriately” - stressed Vaswani.
Although outsourcing trends may change with this changing environment and outsourcing might acquire new watchword, businesses will continue to consider outsourcing as a main tool for cost-cutting and seek benefits from cheaper deals.
Europe beats US in the number of outsourcing deals but anticipates slowdown during recessionary times
Recent report from TPI shows that Europe finally outruns US for outsourcing deals but sees a slowdown during recessionary times. There were a record number of outsourcing contracts signed by European companies during 2008 despite a 50 per cent fall in the value of deals in the second half of the year, and only one significant mega deal signed during the 3rd quarter.
Worldwide, IT outsourcing deals were worth up to €72bn which is more 5.6 per cent than those signed in 2007. The number of contracts in Europe rose by 17 per cent year on year and for the first time Europe outruns the US with 55 per cent of signed deals, compared to just 32 per cent in the US. The number of European deals hit 271, compared to 243 across the Atlantic.
According to Duncan Aitchison, president of TPI research company, such high results were achieved mainly because of the strong first half and in particular through the level of mega-deal activity in the region, which awarded two-thirds of the world's $1bn-plus contracts last year.
But as the global crisis hit hard business in Europe fell by 50 per cent in the second half of the year and the value of contracts awarded in Europe dropped significantly. According to the report new outsourcing contracts in Europe fell from 75 to 56 in the 2nd to 3rd quarter of this year with total contract value decreasing from US$18.5 billion to US$5.5 billion and that weakness continued into the fourth quarter, and looks likely to remain into the first part of 2009.
Aitchison claimed that the outsourcing market will have to rely on smaller deals to maintain its growth in 2009. In the past couple of years the mega deal has been consigned by many to the outsourcing scrap heap in favour of multi sourcing that is choosing separate suppliers for different processes. This has allowed smaller, more specialised service providers to step into the limelight. However, with the focus moving back onto cost as the main deciding factor in outsourcing, having one outsourcing supplier will minimise management, due diligence and supplier selection costs. It should also provide the end user with savings achieved by buying in bulk. So maybe we are seeing a pause as mega deals, generally, take some time to set up.
As more and more organisations come to grips with the credit crunch, we will see outsourcing move to the top of the boardroom agenda. Outsourcing has always been associated with cost savings and now with all companies setting aggressive cost saving targets for next year we may see more and more outsourcing contracts come to fruition.
Worldwide, IT outsourcing deals were worth up to €72bn which is more 5.6 per cent than those signed in 2007. The number of contracts in Europe rose by 17 per cent year on year and for the first time Europe outruns the US with 55 per cent of signed deals, compared to just 32 per cent in the US. The number of European deals hit 271, compared to 243 across the Atlantic.
According to Duncan Aitchison, president of TPI research company, such high results were achieved mainly because of the strong first half and in particular through the level of mega-deal activity in the region, which awarded two-thirds of the world's $1bn-plus contracts last year.
But as the global crisis hit hard business in Europe fell by 50 per cent in the second half of the year and the value of contracts awarded in Europe dropped significantly. According to the report new outsourcing contracts in Europe fell from 75 to 56 in the 2nd to 3rd quarter of this year with total contract value decreasing from US$18.5 billion to US$5.5 billion and that weakness continued into the fourth quarter, and looks likely to remain into the first part of 2009.
Aitchison claimed that the outsourcing market will have to rely on smaller deals to maintain its growth in 2009. In the past couple of years the mega deal has been consigned by many to the outsourcing scrap heap in favour of multi sourcing that is choosing separate suppliers for different processes. This has allowed smaller, more specialised service providers to step into the limelight. However, with the focus moving back onto cost as the main deciding factor in outsourcing, having one outsourcing supplier will minimise management, due diligence and supplier selection costs. It should also provide the end user with savings achieved by buying in bulk. So maybe we are seeing a pause as mega deals, generally, take some time to set up.
As more and more organisations come to grips with the credit crunch, we will see outsourcing move to the top of the boardroom agenda. Outsourcing has always been associated with cost savings and now with all companies setting aggressive cost saving targets for next year we may see more and more outsourcing contracts come to fruition.
How to Make Offshore Outsourcing Deals Withstand Crisis Situations
The Satyam fiasco. Economic recession and budget cuts. These 5 tips will help IT departments create effective contingency plans to transfer services back in house or to another service provider when the unexpected happens.
Without taking decisive action, IT executives expose their organizations to increased risk. Government policies, currency exchange rates, vendor performance, or any force that disrupts the status quo—can seriously impact the delivery of contracted services. IT organizations can best prepare now to create competitive advantage and to avoid unnecessary risks.
Critical strategic changes include the following five actions:
1. Diversifying the types of vendors, emphasizing smaller, specialized providers that offer more customized solutions and better executive access
2. Consolidating service providers to a handful of manageable relationships while continuously measuring the effectiveness and efficacy of each contract.
3. Rationalizing service providers rapidly during merger or acquisition rather than letting stale agreements linger, increasing risk and undermining cost reduction goals.
4. Developing transition plans in case a vendor fails to perform according to the contract or otherwise becomes an unattractive partner.
5. Ensuring the integrity of people, both internally and with the service provider, through effective and personalized human capital management.. Read more
Without taking decisive action, IT executives expose their organizations to increased risk. Government policies, currency exchange rates, vendor performance, or any force that disrupts the status quo—can seriously impact the delivery of contracted services. IT organizations can best prepare now to create competitive advantage and to avoid unnecessary risks.
Critical strategic changes include the following five actions:
1. Diversifying the types of vendors, emphasizing smaller, specialized providers that offer more customized solutions and better executive access
2. Consolidating service providers to a handful of manageable relationships while continuously measuring the effectiveness and efficacy of each contract.
3. Rationalizing service providers rapidly during merger or acquisition rather than letting stale agreements linger, increasing risk and undermining cost reduction goals.
4. Developing transition plans in case a vendor fails to perform according to the contract or otherwise becomes an unattractive partner.
5. Ensuring the integrity of people, both internally and with the service provider, through effective and personalized human capital management.. Read more
Satyam's $1-billion fraud shakes India
Outsourcing giant Satyam's chief Ramalinga Raju admits to posting fake profits for years. It is unclear how the fraud went undetected, but analysts don't expect an industry-wide fallout.
The son of farmers leaves his village behind, moves up from textile mills to real estate to IT outsourcing for multinational firms. He emerges as one of India's wealthiest and most famous entrepreneurs -- until he reveals that his empire was floating on an accounting lie and it all comes crashing down.
The U.S. has its Wall Street meltdown and the Bernard Madoff investment scandal. India has Ramalinga Raju, who appears to have perpetrated the nation's largest corporate scandal in recent memory.
The son of farmers leaves his village behind, moves up from textile mills to real estate to IT outsourcing for multinational firms. He emerges as one of India's wealthiest and most famous entrepreneurs -- until he reveals that his empire was floating on an accounting lie and it all comes crashing down.
The U.S. has its Wall Street meltdown and the Bernard Madoff investment scandal. India has Ramalinga Raju, who appears to have perpetrated the nation's largest corporate scandal in recent memory.
Het jaar om innovatief te bezuinigen
De ICT-industrie lijkt het zwaar te gaan krijgen in 2009. Dat komt door de kredietcrisis en de bijbehorende recessie. Slecht nieuws voor CIO's die de laatste jaren al meerdere malen de broekriem flink hebben aangehaald, want aan de huidige malaise gingen eerst het doorprikken van de dotcom-bubble en de aanslagen van 11 september 2001 vooraf. Maar besparen hoeft niet altijd te betekenen dat er minder gebeurt. Dit jaar is er een gouden kans om alle vroegere beslissing nog eens goed te bekijken.
Toch hoeft het niet alleen ellende te zijn, want voor de CIO betekent zwaar weer ook geweldige kans dingen anders te gaan aanpakken en oude beslissingen weer eens met een frisse blik tegen het licht te houden. Zo zal dan ongetwijfeld duidelijk worden dat er veel winst te behalen is met het breder toepassen van VoIP tussen bedrijven onderling, waardoor kostenposten van vaste telefonie verder gedrukt worden. Verder is het belangrijk haast te maken met het toepassen van virtualisatie in het datacenter. Daarmee bespaart de onderneming niet alleen ruimte, steeds duurder wordende electriciteit, maar vooral ook op de beheerslast. Ook open source moet serieus als optie worden overwogen, zonder natuurlijk de ogen te sluiten voor de risico's van bijvoorbeeld migratie. Lees verder op http://www.computable.nl/artikel/ict_topics/outsourcing/2815223/1276946/2009-het-jaar-om-innovatief-te-bezuinigen.html
Toch hoeft het niet alleen ellende te zijn, want voor de CIO betekent zwaar weer ook geweldige kans dingen anders te gaan aanpakken en oude beslissingen weer eens met een frisse blik tegen het licht te houden. Zo zal dan ongetwijfeld duidelijk worden dat er veel winst te behalen is met het breder toepassen van VoIP tussen bedrijven onderling, waardoor kostenposten van vaste telefonie verder gedrukt worden. Verder is het belangrijk haast te maken met het toepassen van virtualisatie in het datacenter. Daarmee bespaart de onderneming niet alleen ruimte, steeds duurder wordende electriciteit, maar vooral ook op de beheerslast. Ook open source moet serieus als optie worden overwogen, zonder natuurlijk de ogen te sluiten voor de risico's van bijvoorbeeld migratie. Lees verder op http://www.computable.nl/artikel/ict_topics/outsourcing/2815223/1276946/2009-het-jaar-om-innovatief-te-bezuinigen.html
Kwart IT-banen verdwijnt naar buitenland
Een kwart van de IT-banen van de belangrijkste multinationals is tegen 2010 verplaatst naar lagelonenlanden. Dat voorspelt The Hackett Group, een onderzoeksbureau uit Miami.
Multisourcing door arbeidstekort
Veel contracten voor outsourcing zijn toe aan vernieuwing. Dat concludeert het adviesbureau EquaTerra in het `Jaarboek Outsourcing Performance 2009` op basis van bestudering van 674 uitbestedingscontracten van 242 verschillende bedrijven. Veel overeenkomsten dateren uit de periode van voor 2005. Nieuwe contracten zullen er iets anders gaan uitzien dan in het verleden, want het fenomeen multi-sourcing wint aan populariteit bij bedrijven. Dit is gebaseerd op arbeidstekorten, die bedrijven dwingen om outsourcing creatief in te zetten
Crisis vergroot kortetermijndenken in outsourcing
Bedrijven die voor uitbesteding kiezen of deze overwegen denken steeds meer in de richting van het realiseren van kostenbesparingen op de korte termijn, constateren de 200 aanbieders van outsourcingdiensten die door Equaterra zijn ondervraagd. Outsourcing komt kennelijk snel in zicht als middel om de voor 2009 geplande kostenbesparingen te realiseren.
Tekort ICT-professionals stijgt naar 12.000 in 2012
Het tekort aan ICT-professionals blijft stijgen. Oorzaak daarvan is een combinatie van dalende instroom in ICT-opleidingen en een toenemende vraag naar ICT’ers. Het tekort aan HBO/WO ICT-professionals loopt op tot bijna 12.000 mensen in 2012. Dit staat in de ICT Marktmonitor 2008 die ICT~Office, in samenwerking met Heliview Research, op vrijdag 18 april uitbrengt.
Are More CIOs Getting Fired?
As long as there have been CIOs, there have been people claiming that IT executives get fired a lot more than any of their C level colleagues. In the early '90s, some sharp-witted observer quipped that CIO was coming to stand for "Career Is Over." Conventional wisdom held that the average tenure of a CIO was 2.5 years.
IT outsourcing the way forward to cut costs
IT outsourcing will grow if the UK enters a recession, according to the HR chief at a provider that has boosted its takings this year. Barry Hoffman, HR director at Computacenter, said employers would increasingly look to third-party IT providers to cut costs.
Krapte arbeidsmarkt zorgt voor hogere beloning
ICT-bedrijven hebben meer moeite met het vinden van personeel dan andere bedrijfstakken. Meer dan de helft van de deelnemende bedrijven stemt de beloningen hierop af. Dit blijkt uit het Nationaal Beloningsonderzoek 2008.
Vrouwelijke programmeurs in Servië
Vanwege het tekort aan .NET programmeurs heeft SCOPE vorig jaar gekozen voor NearShoring. Sinds de zomer van 2007 heeft SCOPE 3 Servische heren in dienst. Het samenwerkingsverband met Levi9 is succesvol gebleken en daarom heeft SCOPE onlangs besloten de capaciteit in Servië uit te breiden.
Beyond Outsourcing, to Worldsourcing
We are now in the era of Global 2.0, where successful companies know how to harness ideas and innovations from the fast-growing emerging market. Over the next several years, virtually any global company's success will depend on its willingness to reorient its view of the world map. This attitudinal—and longitudinal—shift will have enormous ramifications for business leaders, employees, and customers alike. Here's one perspective on ways to prepare and put yourself in the best position to succeed in this new environment. (source businessweek)
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