Austrian IT Outsourcing Intelligence Report 2011

IT Sourcing EuropeEuropean IT Outsourcing European IT Outsourcing MarketIntelligence Report 2011: IntelligenceAustria November 2011

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKContents Executive Summary This Intelligence Report is based on the survey of the 533 Austrian companiesContents .......................................................................................................... 2 that either outsource their Software Development / Information TechnologyExecutive Summary ......................................................................................... 2 function(s) to an external service provider onshore (within Austria),Survey Overview ............................................................................................. 3 nearshore (within/close to the same time zone) and/or offshore (more than 2 time zones away), or develop their software/IT solutions in-house.Key Takeaways from the Survey ...................................................................... 4Profile of Outsourcers ..................................................................................... 5 The Report aims to help Austrian outsourcing companies:IT Outsourcing Drivers & Factors ................................................................... 10 Get an in-depth understanding of the current IT Outsourcing demandsIT Outsourcing Challenges & Problem Solving ............................................... 12 and trends See what challenges are facing their market peers / competitors andClient – Vendor Relationships ....................................................................... 13 how they respond to themIT Outsourcing Costs...................................................................................... 15 Revise / improve their current IT Outsourcing engagements / business models based on the industry best practicesImpressions of IT Outsourcing ....................................................................... 17Trends & Challenges of the In-House Software Development ...................... 19 The Report aims to help Austrian non-outsourcing companies:Future Adoption of IT Outsourcing Services in Austria .................................. 23 Better understand modern software development/IT costs optimizationKey Findings at a Glance ................................................................................ 25 and/or reduction strategiesConclusions and Predictions .......................................................................... 28 See what challenges are facing the in-house software development and how their market peers / competitors respond to them Evaluate own readiness to adopt the outsourced / distributed development Find out what their market peers think about software development /IT Outsourcing and how they are / will be preparing for adoption of the outsourced development in the future2|Copyright IT Sourcing Eur ope | 2011 | All Rights res erved

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKSurvey Overview Additionally, inbound marketing initiatives were launched in order to attract more companies to participate in the survey. In the frames of this campaign,The Austrian IT Outsourcing (ITO) and In-House Software Development (SD) the following steps were taken:survey was conducted between October 11 and 28, 2011, in the frames of Online press releases and survey announcements distribution;the All-European ITO research. Survey localization and optimization in social media such as LinkedIn, XING, Facebook, blogs ( Twitter, Word Press, IT Sourcing Europe’sSurvey goals: Blog), event management systems (Amiando), and B2B web portals Explore factors that drive Austrian companies to outsource their (Europages, Hoovers) SD/IT functions in 2011 All data obtained were analyzed in the form of industry aggregates. The Explore challenges associated with offshore/nearshore outsourcing answers to the open-ended questions were organized by their relativity to and the most effective problem solving techniques the study goals and displayed as the option “all other responses” in charts Explore the use of different business models in ITO engagements and and graphs further in the Report. find out which model works best for what type of companies and industries Outsourcing Activity & Categories Surveyed: Explore factors that keep Austrian companies away from outsourcing The following ‘outsourcing activity’ is referred to in the 2011 Austrian ITO their SD/IT function(s) Report: Compare and contrast the 2011 and future ITO demands across Austrian industries Software Development / Information Technology Outsourcing (SD/ITO) is the process of transferring part of/entire software development functionThe survey was available online and hosted by SurveyMonkey, the world’s and/or other Internet related work to the execution by the external ITleading provider of web-based survey solutions. In order to reach as many services provider(s)Austria-based companies as possible, IT Sourcing Europe used its owndatabase of business contacts and sent out a survey invitation email to eachcompany’s decision maker(s) (C-level executives, IT / Outsourcing Managers,Directors, Heads of Software Development etc).3|Copyright IT Sourcing Eur ope | 2011 | All Rights res erved

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKThe following categories fall under this activity: Key Takeaways from the Survey Application (app) development and maintenance; Website / ecommerce systems; The greatest demand for ITO services in Austria comes Data warehousing; from B2B software development companies IT security; Data / voice network operations; Most of ITO projects take 3 to 5 IT specialists to complete Remote IT infrastructure management and are valued at €0-49K Web solutions are most outsourced, while embeddedThese categories further fall under the five key areas of expertise: development is least outsourced in Austria Web (Web 2.0, .NET, Java, PHP, open source etc); Most of the Austrian companies outsource nearshore Enterprise 2.0 (J2EE, J2SE, C#, MySQL etc); Most of the Austrian companies outsource to focus on Mobile development (J2ME etc); core competences, reduce operating costs and release in- Embedded development; house staff for other business purposes Software as a service (SaaS) and Cloud Computing The key issues in the Austrian ITO are poor communication with vendor’s teams, shortage of skilled resources on vendor’s side and cultural difference Most of Austrian companies outsource their IT / development to small providers via the fixed-price/time- and-material (T&M) models Most of companies refuse to outsource, because they want to have 100% managerial control of their software / IT projects4|Copyright IT Sourcing Eur ope | 2011 | All Rights res erved

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKProfile of Outsourcers Do Companies Outsource Any Element of Their IT / Software Current Outsourcing Experience Development?5|Copyright IT Sourcing Eur ope | 2011 | All Rights res erved

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK Company Size (Headcount) Primary Industry *All other responses: digital printing, waste management, hospitality, tourism, gambling6|Copyright IT Sourcing Eur ope | 2011 | All Rights res erved

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKRevenue Growth Expectations Outsourcers In-House Development Companies7|Copyright IT Sourcing Eur ope | 2011 | All Rights res erved

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK Size of Project Teams on Vendor’s Side (Headcount) Value of the Outsourced Project(s) (€)8|Copyright IT Sourcing Eur ope | 2011 | All Rights res erved

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK The Outsourced Areas of Expertise Do Companies Multi-Source?9|Copyright IT Sourcing Eur ope | 2011 | All Rights res erved

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK Outsourcing Destinations IT Outsourcing Drivers & Factors Key IT Outsourcing Drivers10 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK Factors’ Rating In Terms of Their Importance In the Choice of the Factors’ Rating In Terms of Their Importance In the Choice of the Outsourcing Destination Outsourcing Partner11 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKIT Outsourcing Challenges & Problem Solving Key Responses to the ITO ChallengesKey Challenges of the Outsourced IT / Software Development*All other responses: high staff turnover on vendor’s side12 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKClient – Vendor Relationships Vendor’s Size* How Companies Found Their ITO Vendor(s)*Other: personal networking, events *survey participants were asked to evaluate their primary ITO vendor in case of engagement with multiple vendors13 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK Service Delivery Models Used In the Outsourcing Engagements Who Makes Final HR Decision / Selects Specialists To Be Involved In the Project?14 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK IT Outsourcing Costs Levels of Companies’ Satisfaction with Their Current Vendors and Quality of Services Provided Do Companies Know Exact Salaries of Their Project Team Members on Vendor’s Side?15 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKHow Actual Annual Incurred Costs Compare To the Contracted Ones Actual Savings from the Outsourced IT / Development16 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKImpressions of IT Outsourcing17 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK Do Companies Plan to Continue Outsourcing Their Projects In The Next 12 To 24 Months?18 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKTrends & Challenges of the In-House SoftwareDevelopment Size of In-House IT Teams How Non-Outsourcing Companies Satisfy Their IT / Development Needs19 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK Part of Corporate Budget Spent on Software Development Level of Satisfaction with the In-House Development20 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK Key Challenges of the In-House Software Development How In-House Developers Respond To Challenges *Other: insufficient product quality *other: improve quality control21 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK Reasons Keeping Companies Away From ITO22 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKFuture Adoption of IT Outsourcing Services in AustriaCircumstances in Which Companies Would Consider Outsourcing IT / Where Current Non-Outsourcers Would Transfer Their IT / Development in the Next 12 To 24 Months Development In the Future23 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK Factors’ Importance In the Future Choice of the Outsourcing Factors’ Importance In the Future Choice of the Outsourcing Partner Destination24 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKKey Findings at a Glance another survey finding that almost 30% of the companies multi-source (i.e. outsource to more than 1 vendor) as a response to their current outsourcing challenges such as the hidden agenda, poor quality of /delayed deliveries andSince the 2011 survey has been expanded and modified, only some of the lack of resources. Additionally, when asked to share their overall impressionsfindings will be compared to the results of the 2010 survey, while the rest of ITO, almost 20% of the survey participants said it was critical to havewill be analyzed ad-hoc. backup providers available in case the primary one fails to deliver on time and/or with appropriate quality. These findings generally hallmark theAs the 2011 survey shows, the greatest demand for the outsourcing services emerging area of multi-sourcing when buyers outsource different elementscomes from the Austrian B2B-focused IT sector. In general, ITO is used across of their IT/development functions to different vendors based on theirdiverse verticals, but has only started to penetrate into digital printing, waste technological expertise, available resource pool, business models etc.management, hospitality/tourism and gambling. Regarding the outsourcing destinations that the Austrian companies chooseMost of the Austrian ITO engagements are valued at €0-49K, which is down to offload their IT processes to, the survey comes up with some interesting38.5% from 2010. The volume of the €50-199K contracts dropped by 16.2%, yet unexpected findings: the majority of companies continue to outsourcethe volume of the €200-499K contracts dropped by 14.8% and the volume of nearshore (up 8% from 2010), a significantly greater number of companiesthe €500K+ contracts dropped by 7.5% from 2010. This finding shows a outsource onshore (i.e. within Austria) – up 27.3% from 2010, while not asignificant shift from large to small ITO contracts and can be attributed to the single company admitted single-sourcing offshore (down 16% from 2010). Asincreased number of web development projects (up 14% from 2010) and seen from the survey results, offshoring is only used as part of the multi-SaaS/cloud computing projects (up 7% from 2010). It also explains why most sourcing strategy: offshore and nearshore (down 3% from 2010), offshore,of the Austrian outsourcers have 3 to 5 IT specialists on their remote teams. nearshore and onshore (up 0.7% from 2010), and offshore and onshoreOn the other hand, the survey results demonstrate the growth of enterprise (down 7.7% from 2010). Additionally, more than 33% of survey participantsand embedded development outsourcing projects: up 18% and up 5% from agreed with the statement that it is very important to have the vendor’s2010. Based on this finding, it is assumed that the value of the Austrian ITO team working within/close to the same time zone as Austria.projects will increase in the next 12 to 24 months and reach or even outrunthe volume of 2010. Regarding the factors that the Austrian companies consider as very important when deciding on their outsourcing geography, more than 60%Another interesting finding is that in 2011 more than 60% of the Austrian pay attention to the available IT resources pool, almost 48% - to thecompanies outsource their solutions to 2 and more external service availability of profound language skills and almost 40% - low costs.providers, which is up 50% from 2010. This finding shows that this year ITObuyers are more focused on securing their outsourced operations and are Analyzing the top three drivers boosting corporate decisions to outsource inreluctant to be dependent on a single provider. This thesis is supported by 2011, almost 55% of the Austrian ITO buyers need to focus on their core25 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKcompetences such as business development, marketing and reputation (up into a mutually beneficial agreement with them regarding terms of payment,47.2% from 2010), 50% seek reduction of their operating costs (up 20% from pricing structure etc. Additionally, many small ITO buyers feel more2010) and almost 30% tend to free in-house IT staff for other business comfortable when cooperating with small providers subjected to fiercepurposes (e.g. business analysis, audit of IT needs, issues management etc) competition and, thus, having to better treat and service their clients in order(up 34.5% from 2010). In 2010, the Austrian companies outsourced mainly to to retain them.reduce costs, find highly qualified yet lower-cost IT personnel outside Austriaand lower down software development budgets. This finding suggests that What challenges are facing the Austrian ITO buyers in 2011 versus 2010?the whole nature of outsourcing as a concept begins to change and more According to the survey results, the top four issues are poor communicationcompanies begin to utilize it as a long-term IT management strategy able to with vendor’s project management and executive teams (up 26.9% fromsatisfy corporate demands for sustainability, innovation and thrift rather 2010), lack of appropriate resources on vendor’s side (up 36.9% from 2010), cultural difference (up 19.3% from 2010) and change management.than a short-term tactic to reduce expenses (which has been the case overthe past decade). In 2010, besides poor communication with the vendor and culturalRegarding the client – vendor relationships, more than 56% of the survey difference, two other most critical issues were delays in project deliveryparticipants admitted selecting their ITO partner(s) based on successful schedules/missed project milestones (down 0.7% in 2011) and the hiddenpilot/test project demonstration, 54% relied on positive vendor references agenda (up 10.8% in 2011). In 2011, the hidden agenda has moved down from top three to top six challenges, while delayed delivery has moved downfrom their peers when evaluating prospective ITO partners and more than52% based their ITO partner choice on the company’s experience in the from top three to top ten challenges. These shifts may be due to companies’similar projects/technologies. Low service rates were considered as multi-sourcing strategies and revised vendor management processes (to beextremely important by less than 46% of the survey participants. In contrast, discussed below).in 2010 the Austrian outsourcers rated low rates (up 28.5% in 2011) and Regarding the most commonly used issue solutions, almost 60% of theinnovative business models (up 17.4% in 2011) as the two most important Austrian outsourcers increase face-to-face communication with vendor’scriteria in their ITO partner choice besides positive references from peer project managers and teams (up 28.1% from 2010), more than 45% dedicatecompanies (up 28.2% in 2011). more managerial resources (who are oftentimes relocated to the vendor’sRegarding the vendor’s size, almost 60% of the Austrian ITO buyers engage site to monitor the project) (up 25.5% from 2010) and almost 32% revise and modify their vendor management processes (up 14.8% from 2010).with small vendors (less than 50), while less than 10% engage with largeservice providers (1,000+). This finding is explained by the actual size of the In 2010, the top three solutions companies used to fix their ITO issues wereoutsourcing companies surveyed: more than 50% are small and less than the same as in 2011. The survey shows that improvement of the face-to-face10% are large. Since many large ITO service providers are usually quite communication remains the key goal most of the Austrian ITO buyers areprocess-packaged, hierarchical and bureaucratic, it takes a while to come26 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKtrying to reach. In contrast, in 2010 only 6% of the companies polled companies. Dedicated development and captive centers rapidly lose theirconsidered partnering with a different vendor in order to fix issues with the popularity among the Austrian ITO buyers.current one(s), while in 2011 this number has increased by 12.2%. Thisfinding suggests that more companies believe that re-sourcing a project to a Regarding the pricing transparency, around 39% of companies polled claim tomore experienced vendor will eventually cost them less money and efforts know exact salaries of each member on the vendor’s / own supervised teams, which is up 17.1% from 2010, while the grand majority still does notthan trying to fix the issues with the failing ones. Alternatively, this findingcan be interpreted in the following way: Austrian ITO buyers constantly know what service fee is added to each team member’s salary (down 13.1%“raise the bar” for their providers and challenge them with more difficult and from 2010). The finding suggests that most of the Austrian IT outsourcers stillsophisticated tasks. As a result, only mature and well-prepared providers face the hidden agenda in their engagements. On the other hand, whenwith realistic HR growth capabilities and access to complex technologies are asked to compare the actual annual incurred costs to the expected (contracted) ones, 55% admitted the actually incurred and contracted costsable to overcome these challenges and retain clients. Providers who are onlyfocused on winning more new clients and, thus, provide incomplete / to be about the same (up 25% from 2010), 40% said their actually incurreduntruthful information in their RFP responses, intentionally overestimate costs were up to 25% higher than expected (up 8% from 2010), 5% pointedown project completion capabilities and bid very low, often fail to meet their to the 50%-75% difference in the actually billed versus anticipated costsclients’ increased demands. This finding generally suggests that ITO service (down 5% from 2010) and another 5% claimed their actual incurred costs were up to 25% lower than expected (up 2% from 2010).providers will have to modify their engagement models and focus more onclient retention in the upcoming months. Regarding the actual cost saving, in 2011 most of the Austrian outsourcersAnother finding suggests that many ITO buyers lose confidence in manage to save 10% to 24% of operating expenses (up 9.1% from 2010) andprofessional consulting services and rarely bring in consultants to assist with only around 5% - 40% to 59% (the same as in 2010). Unfortunately, not a single respondent claimed to save 60% and more from the outsourcedproblematic outsourcing engagements. In 2011, the number of companieshiring ITO consultants to help fix ITO issues has dropped by 5.5%, compared operations, while in 2010 16% of companies claimed to save 60% and more.to 2010. This finding is most likely attributed to the above-discussed finding that many Austrian outsourcing companies still face the hidden agenda that preventsRegarding the ITO engagement models used by the Austrian outsourcers, the them to save more.survey shows that the project-based models remain the most popular ones When asked to assess their level of satisfaction with the current ITO partners,(almost 70% of survey participants pointed to using them). The secondpopular model is Own Development Team (when ITO buyers use their their work quality, ability to meet deadlines and general attitudes,partners as space and resources providers, but retain maximum project cumulative 33.3% said they were satisfied or somewhat satisfied (downmanagement and control, i.e. literally extend their in-house IT teams to the 22.7% from 2010) and only around 15% said they were very satisfied (up 7%lower-cost and resource-abundant locales) that is used by almost 24% of from 2010). However, almost 20% of companies admitted being somewhat27 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKdissatisfied with their current providers (down 12% from 2010). A positive operating costs down in the grade of the top three outsourcingfinding is that this year not a single Austrian ITO buyer has expressed a very drivershigh dissatisfaction level, while in 2010 this level made 5%. It generally  Cost advantage is no longer the major factor considered in the choicedenotes the readiness of the Austrian companies to select and manage their of the ITO locales. Contrarily, Austrian ITO buyers look for theITO partners in a smarter way. available IT talent pools and appropriate English language skills  When choosing their ITO partners, companies are still over-Regarding the companies’ overall impressions of their ITO experiences, more influenced by the references from their market peers andthan 50% claim their decision to outsource has been the right one (up 27.4% underestimate such important criteria as vendor’s realistic scalabilityfrom 2010), while around 10% of the survey participants regret having made capability and flexible and innovative business models. This negativesuch a decision at all (up 7.5% from 2010). trend explains why “poor communication with vendor’s PMs and project teams” and “lack of appropriate resources on vendor’s side”Conclusions and Predictions top the list of the most critical issues in the Austrian ITO  The prevailing majority of the ITO buyers partner with small serviceBased on the results of the Austrian ITO and In-House Software Development providers. This not so positive trend explains why companies areSurvey, several obvious trends were identified: missing resources, facing the hidden agenda, poor project management and poor quality of deliveries. Small providers are, as a  More small and mid-market actors start using ITO services in search rule, not mature and structured enough to properly manage ITO of innovation and differentiation relationships, innovate and put all of the critical processes in place.  There is a growing demand for ITO services from innovative lucrative Nor are they able to hire and retain the most highly-qualified IT niches such as mobile computing and digital media personnel that prefer to work in stable companies with a well-  Compared to the in-house development companies, more established track record and able to meet high salary expectations. In outsourcers anticipate increasing their annual revenue by 20%-49% order to “keep head above the water” and withstand tough and 50%+ in 2011. However, no clear link between ITO engagement competition on local IT headhunting markets, small and mid-sized and annual revenue growth is observed ITO service providers should consider the option of cooperating with  Austrian ITO contracts become small in value and so do project the local higher education institutions and universities and creating teams in-house tech labs to incubate own IT talent pools from students and  Many Austrian ITO buyers multi-source their solutions to reduce graduates. However, such initiatives will inevitably lead to the extra possible risks of the single-vendor dependence investments and, as a result, will lead to the service fee increase  Companies’ necessity to focus on core competences such as (today, low fees are the only advantage that small providers have marketing and business development shifts necessity to reduce over their larger competitors)28 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UK  Compared to 2010, more Austrian ITO buyers make final HR efficient in-house development / IT management, more companies decisions and select IT specialists on vendor’s side to be involved in are expected to start utilizing ITO in the months to come their outsourced projects. It hallmarks the origination of the next-  The fact that cumulative 45.2% of the non-outsourcing survey generation outsourcing mindsets when it no longer suffices to just participants admitted their reluctance to outsource due to the fear of offload the project to the 3d party and wait for the turn-key delivery. losing own project control and stereotypical belief they are yet too Now companies strive to have more control of their outsourced small and immature for such an undertaking suggests that more ITO operations which marks a very positive trend service providers will have to innovate their engagement models to  On the other hand, the grand majority of the Austrian ITO buyers are allow more benefits to SMEs as well as maximum project control still unaware of the actual salaries of each member on their vendor’s retention. Some of such innovative models already in use by nearly project team(s) which marks a negative trend and suggests that 30% of companies are Own Development (Agile, SCRUM etc) Team companies do not know their vendor’s price formation and are, thus, and Virtual Operating Subsidiary. More similar models are expected incapable to avoid extra costs and have predictable costs for future to come on stage in the upcoming months ITO planning  The future drivers of ITO decisions in Austria may change with more companies beginning to outsource in order to share risks, releaseThe analysis of the above findings as well as the findings of the non- capital funds and reduce IT budgets. This trend will result in more ITOoutsourcing companies’ survey allows making some forecasts for the future buyers focusing on establishing long-term strategic and shared-development of the Austrian ITO market: service partnerships with their service providers  The fact that the grand majority of current outsourcers plan to  Geographic preferences of the Austrian ITO buyers are not likely to continue with their outsourced operations in the next 12 to 24 alter much in the forthcoming months: the majority will still months suggests that the level of ITO adoption across the Austrian outsource nearshore and onshore, while only few will transfer their industries will not decrease in the near future IT / software development offshore  In addition, the fact that there is an obvious demand for ITO services  Choosing their ITO locale, Austrian companies will look at language from SMEs and innovative niche players suggests that the level of ITO skills’ availability, vast IT resource pool and legal system maturity. adoption is likely to increase in the future. This prediction is Thus, intellectual property protection in ITO engagements is likely to supported by the finding that more than 14% of today’s in-house become a hot topic in the future outsourcing debate development companies in Austria openly indicated considering  Regarding the choice of the ITO partner, the future criteria will most outsourcing as a response to their current IT challenges probably remain the same as in 2011: Austrian ITO buyers will still  Given that pressing customers, high cost and shortage of domestic look at the vendor’s ability to successfully complete the pilot project, resources are some of the main barriers in the way of successful and sound experience in the similar projects and will also rely on market peers’ vendor references29 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

European IT Outsourcing Intelligence Report 2011: AustriaEuropean IT Outsourcing Intelligence Report 2011: The UKAbout IT Sourcing Europe Our Contacts:IT Sourcing Europe is a UK-based market intelligence company specialized inEuropean IT Outsourcing research and advisory. The Meridian, 4 Copthall House, Station Square Coventry, West Midlands,IT Sourcing Europe provides: CV1 2FL United Kingdom  Top quality quantitative and qualitative IT Outsourcing market Email: info(at)itsourcing-europe.com research and fieldwork services Tel.: +44(0)2476992505  Evaluation of Central and Eastern Europes IT Outsourcing services Web: www.itsourcing-europe.com providers and their factual capabilities to deliver innovative Blog: http://itsourcingeurope.wordpress.com technological solutions on time and on budget Facebook: http://www.facebook.com/pages/It-Sourcing-  Free consulting services for European companies planning to Europe/136082959822709 outsource IT / software development functions and / or change their current IT Outsourcing strategy / engagement Follow our tweets @ITSourcingEurop  Ad-Hoc IT Outsourcing strategy development and full-cycle support SlideShare: http://www.slideshare.net/itsourcingeuropeIT Sourcing Europe cooperates with several European ICT and Outsourcing Registration at the UK Companies House: 07217899organisations in terms of free analytics / information exchange. Amongst itsmajor information partners are Outsourcing Verband, Das OutsourcingJournal, Outsourcing Portal, Ngi and others. You are free to use, share and/or remix any part of this work as long as you attribute it to IT Sourcing Europe.30 | C o p y r i g h t I T S o u r c i n g E u r o p e | 2 0 1 1 | A l l R i g h t s r e s e r v e d

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Austrian IT Outsourcing Intelligence Report 2011

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