information technology & outsourcing. migration to central & eastern europe
DESCRIPTION
by Alan Harlan Chief Executive Officer, SoftServe IT Weekend Ukraine 2013 is an international conference, initiated to help Ukrainian IT industry professionals to grow and develop. 14.09.13, Kyiv http://ukraine.itweekend.ua/TRANSCRIPT
Information Technology & Outsourcing
Migration to Central & Eastern Europe
Outsourcing Industry
Outsourcing will be a $483 billion global industry by the end of 2013, with significant emphasis on three broad areas:
Logistics, sourcing and distribution services;
Information technology services, including the creation of software and the management of computer centers;
Business process outsourcing (BPO) areas such as call centers, financial transaction processing and human resources management.
Source: Plunkett Research
Software and IT Outsourcing to Grow
▪ IT outsourcing and hardware maintenance will grow by 7.3%, as firms especially in Europe, Japan, and other struggling economies turn to outsourcing to save money.
▪ Elsewhere, software will be the growth story, with global growth of 6.5%.
▪ Computer equipment will join software as the fastest growing categories at 7.0% and 8.8%
▪ IT consulting and systems integration services at 6.8%.
Source: ITO News
KPMG 2013:State of the Outsourcing Industry
▪ Key Findings:
– Efficiency & Effectiveness
▪ Cost Reduction (87%)
▪ Greater Scalability of Operations (82%)
▪ Process Standardization (74%)
– Strategic Focus
▪ Accessing Better Talent (70%)
▪ Accessing Better Technologies (62%)
▪ Improving Analytics Capabilities (62%)
Source: KPMG 2013 State of the Outsourcing Industry
The Tholons2013 Top 100 Outsourcing Destinations
Southeast Asia South AmericaEastern Europe
“Dynamic shifts occurring across regional outsourcing landscapes. For this year, the outsourcing landscapes of three particular regions have progressed significantly”
Source: Tholons
Trends Shaping the Outsourcing Market
Source: IT Business Edge
▪ Going Vertical▪ Outcome-based pricing▪ Shifting to managed
services▪ More strategy less staff
augmentation▪ Supporting an
empowered employee
▪ Restructuring of contracts
▪ Asking for help, expecting solutions
▪ ITO trumping BPO▪ Developing best-of-
breed strategies▪ In the Cloud…now
what?
Global Outsourcing Trends
Global demand is higher than supply
Eastern Europe is target market
Ukraine is the target for western and eastern Europe
Czech
Romania Ukraine
Poland
Trends that Influence IT in Ukraine
IT & Outsourcing CEE
▪ Facts:
– Companies are increasingly considering alternative locations to India for services work, and one of the leading choices is CEE.
– CEE has a strong talent pool and strengths in sophisticated software engineering.
– CEE’s core competency is high-end, sophisticated custom software development.
Source: Forrester
Ukraine – IT Specialists
▪ Approximately 25,000 IT specialists graduate from Ukrainian universities each year.
▪ The country holds the 4th position globally for the number of IT specialists.
▪ Ukraine holds leadership position together with the USA, India and Russia.
▪ Over the last 8 years the volume of software development and IT outsourcing services market has grown by a factor ten or 30-40% annually in average.
Source: ITO News
Ukraine – IT Specialists
▪ Geographical distribution of
Ukrainian IT specialists:
– 40% Kyiv
– 19% Kharkiv
– 16% Lviv
– 7% Dnepropetrovsk
– 4% Odessa
▪ More than 50% of the Ukrainian IT
market is exporting IT services or
software development outsourcing.
▪ Experts say that the most promising
areas of the industry from now on
will be services related to
outsourcing and system integration
plus development of cloud computing
technologies.
Source: ITO News
Higher Education
▪ Ukraine’s higher education systems comprises:– 81 Universities– 48 Academies– 149 Institutes– 2 Conservatories– 327 Technical
schools– 216 Vocational
schools
Kiev UniversityNational University of Kyiv-Mohyla Academy
Kiev University
Kharkiv Polytechnical Institute
Lviv UniversityDonetsk National University
Donetsk National Technical University
Kiev Polytechnic Institute Kharkiv University
Source: ITO News
Ukraine and Outsourcing Facts
▪ Ukraine was ranked the first among 16 countries of the CEE region by the volume of IT outsourcing services and the number of IT outsourcing companies.
▪ According to the 2010 Global Services 100 list, Ukraine is 11th among 20 leading countries in the area of IT Outsourcing and High Tech Services.
Source: ITO News
IT & Outsourcing Ukraine
Source: Code Spring
IT & Outsourcing Ukraine
Source: ITO News
Top needs…Analytics, Big Data, Mobility and Cloud
▪ In software, business intelligence and analytics apps will big the hot products, along with mobile smart process apps for collaborative business processes.
▪ The latter, which are primarily sold on a software-as-a-service basis, will help SaaS subscription revenues grow two-to-three times faster than combined license-and-maintenance software.
Source: ITO News
Organization Strategy
Service Offering
Organizational Capability
Enablers
Organizational structure
KPIs andGovernance
Organization Strategy
Execution Strategy
• Depth of verticalisation in organization structure (sales, solution design, delivery, support functions) – aligned to strategy and scale/scope
• Reporting relationships and formal hierarchy (matrix etc.)
• Alignment of Organization strategy with evolving client needs
• Clear articulation of horizontal and vertical strategy
• Investment strategy – Organic and M&A
• Leadership development
State of verticalisation in the OPD context has been assessed on six broad parameters
• Defining market and services based
on strategy
• Platform development
• Skill sets, knowledge and competencies development
• Change in KPIs to enable/implement the change – defining accountabilities and control
• Implementation of the change in mind set – Behavioral changes and policies• Change management• Alignment of training and hiring in accordance with strategy and organization structure• Talent management
Verticalization by OPDs is defined as alignment of their strategy, offering and operating model to meet the needs of specific industry verticals
Global OPDs Today
With the maturity of market, OP/AD organizations will increasingly need to redraw their strategies to meet evolving client needs
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Cost reduction for transactional scope
• Primary focus to reduce cost of operations / LA
• Need to outsource non-core functions
• Buyer (client): Example SVP R&D
Core R&D support
• Need for value-added OPD offerings
• Need for client-specific solutions
• Proven track-record
• Buyer (client): CTO and Functional Heads
Transformation Partner
• Buyer (client): CEO and COO, CTO
• Adopt outcome – based models
• Provide process transformation in core R&D processes
• Provide Eco-system delivery for 360⁰ relationship and VAS
• Reliable, risk sharing, financially stable strategic partner
• Need for ideation or TCO impact to support growth
• High Value Services PA, DA and UI/UX
• Move beyond basic QA and R&D functions
• Develop vertical experience in client focus areas
• Customise for clients – Example integrate custom Product IP Support
• Offer outsourcing services for non-core R&D Functions
• Offer competitive pricing to win contracts
• Develop standardised services across clients
Global OPDs have focused on ‘Core-Technology Support’ but will increasingly need to focus on becoming transformation partner and develop verticalized thinking for an industry relevant value proposition.
SoftServe Transformation• UI/UX
Consulting• Product
Ideation• Actionable
Analytics• Mobility /
Security
Highly Risk Adverse Risk Acceptance
Abiliton Infusion
Systems of engagement guide people in their physical world
Mobile is the new face of engagement
Systems of record host transactions in the
virtual world
Systems of engagement empower people with context-rich apps to take the next most likely
action
Source: November 16, 2012, “Great Mobile Experiences Are Built On Systems Of Engagement” Forrester Report
Context-rich experiences are the key to successful systems of engagement
Ukraine… the Clear Choice for Outsourcing
▪ IT outsourcing market volume of US$ 1.1bn
▪ More than 1,000 outsourcing companies operating in the industry
▪ More than 25,000 IT specialists involved in outsourcing.
Source: ITO News
Ukraine is one of the most attractive nearshore outsourcing destinations for both North American and European businesses.