Central & Eastern Europe IT Outsourcing


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Central & Eastern Europe IT Outsourcing

  1. 1. Central & Eastern European IT Outsourcing 2007-2011 Please visit my blogs: http://analyzechartsgraphs.blogspot.com/
  2. 2. Central & Eastern European Outsourcing Market <ul><li>Central & Eastern European IT Outsourcing Market: </li></ul><ul><li>Good YoY growth since 2009 (31%) and 2010 (24%). Growth was very low in 2008 (2%) due to the global financial crisis . </li></ul><ul><li>Total revenues were close to US$ 5Bn in 2010. 2011 the growth is expected to continue and total revenues expected to be close to US$ 6Bn. </li></ul><ul><li>Complex and knowledge-intensive; IT projects like software engineering and R&D which require expertise and innovation. </li></ul><ul><li>Soviet Union has to be credited for scientific education that most of the countries in this region have . </li></ul><ul><li>Highest concentration of scientists, mathematicians and highly qualified technical engineers. </li></ul><ul><li>Comprises of sixteen countries Ukraine, Romania, Hungary, Poland, Czech Republic, Belarus, Bulgaria, Estonia, Serbia, Slovakia, Lithuania, Croatia, Moldova, Latvia, Slovenia and Albania. </li></ul>Source: CEEEOA Outsourcing Review
  3. 3. Central & Eastern European Outsourcing Market <ul><li>Ukraine has seen good 25-35% growth in the past two years and it is expected reach US$ 1Bn in revenues in 2011. </li></ul><ul><li>Software development, software testing and application maintenance are major services </li></ul><ul><li>AT Kearney 2011 Global Services Location Index (GSLI) rank 38. </li></ul><ul><li>Kiev, Lviv and Kharkiv are the outsourcing destinations. </li></ul><ul><li>Romania is the second dominant player in the region with growth of 20% YoY. 2011 revenue growth expected to be 20-25% YoY. </li></ul><ul><li>Outsourcing like IT services and support, contact centers and back-office support. </li></ul><ul><li>Genpact, Wipro, HP, Oracle etc have set up operations here. </li></ul><ul><li>Bucharest and Cluj-Napoca are the outsourcing destinations. </li></ul><ul><li>AT Kearney GSLI 2011 rank 25. </li></ul><ul><li>Hungary has a 25% share for Outsourcing and growth of 27%-33% in last two years. Revenue growth for 2011 expected to be 25-28% YoY. </li></ul><ul><li>Morgan Stanley, GE, Nokia TCS, Genpact set up centers. </li></ul><ul><li>Application-related outsourcing , payroll & HR management, accounting and billing are the key processes. </li></ul><ul><li>Budapest is known as the most desirable outsourcing destination and AT Kearney GSLI 2011 rank 31. </li></ul>
  4. 4. Central & Eastern European Outsourcing Market <ul><li>Poland is a high skilled destination for IT outsourcing and is among the top 10 preferred Outsourcing Nations </li></ul><ul><li>Highly-qualified IT community and world-class education system. Krakow and Wroclaw are the latest preferred outsourcing </li></ul><ul><li>Poland has seen good growth (30%) in past two years. 2011 expected revenue growth of 30% YoY. </li></ul><ul><li>Multi lingual capability is an advantage. AT Kearney GSLI 2011 rank 24. </li></ul><ul><li>Czech Republic has seen normal growth (15%-20%) in the past two years. 2011 expected to grow by 20% YoY. </li></ul><ul><li>Prague has been a well know outsourcing destination for the past ten years. </li></ul><ul><li>Apart from Low cost and proximity advantages the country also has highly skilled professionals and good education system. </li></ul><ul><li>Many MNC like IBM, Accenture, and Microsoft have all set up operations. AT Kearney GSLI 2011 rank 35. </li></ul><ul><li>Belarus outsourcing industry survives due to the availability of low cost resources and support from the government policy –“IT Country”. High quality of education, geographical and cultural proximity to Europe. </li></ul><ul><li>The presence of bigger outsourcing vendors focusing on Germany and programming and R&D are key services. </li></ul><ul><li>The market has grown around 24-28% in past two years.. Minsk is the outsourcing destination. 2011 revenue growth 25% YoY. </li></ul>
  5. 5. Central & Eastern European Outsourcing Market <ul><li>Bulgaria is expected to grow by about 50% in 2011. YoY growth was 20-30% last two years. </li></ul><ul><li>Analytical skills, language skills, cultural and geographic proximity, low tax rates, are the basis of competitiveness. </li></ul><ul><li>Majority of the outsourced work come from the UK, US and Germany. MNC like Microsoft, CSC, SAP, Boeing, Ford, Nortel etc have centers in Bulgaria. </li></ul><ul><li>AT Kearney GSLI 2011 rank 17. Sofia, Varna are the major cities. </li></ul><ul><li>Estonia has pool of highly educated, tech-savvy workers; a modern telecommunications infrastructure; and low cost of operations that has attracted companies like eBay. </li></ul><ul><li>Tallinn is the major outsourcing destination in the country. Negative YoY growth in 2009(-17%) but positive in 2010 (10%). 2011 expected to grow 15% YoY. </li></ul><ul><li>Work is mostly outsourced from the Nordic region, Russia, Poland and Germany. AT Kearney GSLI 2011 rank 11. </li></ul><ul><li>Serbia geographically proximity and cost effective are key factors. Intellectual capital, attractive labor costs, high fluency in English and strong engineering education are other factors. </li></ul><ul><li>Government offers a range of incentives aimed at enhancing the country’s competitiveness as an investment location. Belgrade is the outsourcing city. </li></ul><ul><li>It has been a good two years for Serbia as the outsourcing industry performed well and has moved up in the region. YoY growth of 21% in 2010. 2011 revenue grow by 20-24% YoY. </li></ul>
  6. 6. Central & Eastern European Outsourcing Market <ul><li>Slovakia outsourcing industry is supported by good quality infrastructure like telecom, power and real estate. </li></ul><ul><li>Multi national players like Dell, HP, Accenture, and IBM have operations in this country. Technical support centers, software development & maintenance, BPO. </li></ul><ul><li>Bratislava and Kosice are main cities. AT Kearney GSLI 2011 rank 40. Good YOY growth in 2009 (39%) but fell in 2010 (18%).2011 20% YoY. </li></ul><ul><li>Lithuania has the largest IT industry among the Baltic nations and 75 percent of all Baltic IT companies are located in Lithuania. </li></ul><ul><li>BPO, CRM and call centers provide services in English, German, Russian, Polish and Scandinavian for the entire European market. </li></ul><ul><li>Geographical proximity to clients, quality infrastructure, and an educated workforce are the primary drivers. </li></ul><ul><li>AT Kearney GSLI 2011 rank14. Good YOY growth in 2009 (20%) but fell in 2010 (12%) & 2011(15%) Vilnius is the outsourcing destination. </li></ul><ul><li>Croatia is a country with good talent and growth opportunity. Zagreb is the destination for outsourcing. Tax incentives are provided by the government. YoY growth of 12-16% in last two years. 2011 grow by 18% YoY. </li></ul><ul><li>International companies such as Microsoft, Ericsson, Siemens, and IBM have operations in Croatia. </li></ul><ul><li>Outsourcing services such as software consultancy, custom application development, consultancy, customization services and system integration services. </li></ul>
  7. 7. Central & Eastern European Outsourcing Market <ul><li>Moldova has a good pool of well educated, highly skilled, multilingual professionals, geographic proximity, cultural affinity and compatibility with Europe. Government provides tax exemptions. </li></ul><ul><li>Companies like Adobe, Endava, Pentalog, Cedacry, and Allied Testing have centers in the country. Chisinau is the major city. </li></ul><ul><li>Services that are offered here are Financial and accounting outsourcing, QA and testing and BPO. YoY growth of 13% in 2010. 2011 revenue grow by 12-13% YoY. </li></ul><ul><li>Latvia's IT capabilities already gained some recognition as the IT BPO sector is not much popular. YoY growth of 14% in 2010. 2011 YoY 15%. </li></ul><ul><li>But there is a potential for growth and the government is investing on improving the scenario by providing tax incentives. AT Kearney GSLI 2011 rank 13. </li></ul><ul><li>Small country with good technology infrastructure and Outsourcing is seeing good growth in the last two years. </li></ul><ul><li>YoY growth of 26% in 2010. Ljubljana is the major city. The city also appears in the riskiest cities for outsourcing. 2011 YoY 25-30%. </li></ul><ul><li>Government need to support in terms of favorable policy and improve education system. </li></ul>
  8. 8. Central & Eastern European Outsourcing Market <ul><li>Very nascent stage of outsourcing. Government has to support the industry for growth and the education system has to be improved. YoY growth of 13%. 2011 YoY growth by 15% in terms of revenue. </li></ul><ul><li>Central & Eastern Europe Outsourcing Future </li></ul><ul><li>Outsourcing is expected to grow at a healthy rate in the next few years. Traditional Indian Outsourcing firms that dominate the Global Outsourcing Industry have built up significant capabilities in this region by setting up their own operations and acquiring firms in this region. </li></ul><ul><li>Good scientific and engineering education, multi lingual capabilities, local talent pool at low cost is going to fuel the outsourcing market in this region. Governments across this region have announced economic incentives, favorable economic policies and developed the education system by investing in monetary and human resources are a major initiative for growth. </li></ul><ul><li>Near shoring is another trend that is fueling growth as the region has geographical proximity to European Nations, similar time-zones and cultural affinity. Language capability is critical as India and China do not have the European language capability. </li></ul><ul><li>Current European debt crisis, default by Greece and trouble in other nations like Italy, Portugal, Spain may trigger a new recession, that may cause a revenue drop for Eastern European near shore outsourcing companies in central and Eastern Europe region. </li></ul><ul><li>The region is expected to keep up the growth rate in the coming years as countries at the top like Ukraine, Romania, Poland, Hungary and smaller players like Estonia, Lithuania are investing in this sector to increase the revenues from the Outsourcing sector. </li></ul>Please visit my blogs: http://analyzechartsgraphs.blogspot.com/