Value Shore in Daily Telegraph supplement


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Daniel Naoum, co-founder of Valueshore wrote for the supplement of Daily Telegraph his best tips for IT outsourcing.

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Value Shore in Daily Telegraph supplement

  1. 1. 12 · NOVEMBER 2010 AN INDEPENDENT SUPPLEMENT DISTRIBUTED WITHIN THE DAILY TELEGRAPH In the past,when most people con- sidered offshoring an IT project, India would probably have been top of the list. While it still re- mains a good choice, several new locations closer to home have been refining their offering over the past few years. The boom in nearshoring has been popular with companies that want to cut down on the expense of flights to distant locations and, as they see it, reduce the risk of placing sensitive IT projects be- yond Europe. Hence the trend has led to com- panies working with outsourcers throughout Eastern Europe where lower wage rates and a similar time zone are seen as major ad- vantages. Malta is also growing in stature in IT outsourcing thanks to a national programme to gen- erate more than a thousand IT graduates every year as well as the reputation it has earned as an on- line gaming centre.Claudio Grech, Chairman of the Malta Informa- tion Technology Agency, reveals that the islands’ government real- ised this put it in a good position to become a primary IT outsourc- ing location. “As you’d imagine, the online gaming companies that have set up in Malta need a very robust IT infrastructure so they can keep running 24/7,” he says. “So we have developed a very good infrastructure and realised that we could extend this to offer international clients IT outsourc- ing. To make sure we were ready for this, we boosted our invest- ment in IT in schools, further ed- ucation colleges and our universi- ty to ensure we keep on producing the bright graduates the IT out- sourcing industry requires.” EU law applies When considering nearshoring IT projects the advice from con- sultants will generally be to en- sure that a location’s legal system is robust and, preferably, that the country is an EU member where labour and contract laws will be standardised. Grech further adds that,certainly in Malta’s relationship with Britain, a shared culture can be of benefit. “English is an official govern- ment language here,after Maltese, and it’s the language of business throughout the islands,” he says. “We think a shared language is helpful but also we used to be a British colony and so there are very strong links with the British. It’s placed us in a good position because it meant that our laws and finan- cial systems were built on the Brit- ishmodelandalthoughthey’venow had to alter slightlyto fit inwith our EU membership, there’s still that similarityand common heritage.” Data protection rules are another major driver in companies choos- ing to nearshore IT projects with- in the EU because by keeping sensi- tive data within the common mar- ket, enterprises can avoid potential privacyproblems. EU options grow for IT outsourcing SEAN HARGRAVE Question: Are there complementary or alternative locations to offshoring IT projects? Answer: Nearshoring is proving popular for clients wanting projects to remain within the EU NEWS LOOK CLOSE TO HOME 4 TIP FACTS Public sector cuts looks set to encourage shared services. Bed- fordshire and Hertfordshire police forces are leading the way by com- bining IT teams to save £350,000 per year and possibly as much as £1.7m over the next five years. The AT Kearney Global Serv- ices Location Index for 2009 found that the Czech Republic, Poland and Hungary had all slipped down its rankings due to higher costs. How- ever, the legal attraction of keeping EU work within the EU was not con- sidered within the judging criteria which named India, China and Ma- laysia as the top three countries. A survey by accountants, BDO, makes grim reading for outsources hoping to attract inward investment. Only 5 per cent of executives from 10 countries said the UK would be a target for international expansion, compared to 32 per cent for China and 20per cent for India. Look at all costs 1 Thereisoftentoomuchfocus on day rates rather than the overall cost of outsourcing. The hidden costs associated with trav- elling to sites and management time out the office dealing with project complications,as far afield as India and China, can often ne- gate the perceived original cost savings. Consider times zones 2 Many businesses are finding that outsourcing to a differ- ent time zone is disruptive.If mis- takes are made it can take 24 hours torectifythem.Nearshoringcloser to home means that any problems can be dealt with face-to-face or over the phone on the day, if re- quired. Think ahead 3 India has lost its shine due to rising attrition,wage in- flation and skills shortages.This has resulted in a dip in quality because of staff churn, less sen- iority and difficulties in commu- nication. Businesses need to en- sure that whatever region they outsource to,does offer them the quality and scalability they require. Review labour flexibility 4 Nearshoring within the EU means there are no delays in waiting for visas for staff mem- bers to work in EU countries. MY BEST TIPS 5 Daniel Naoum co-founder of Valueshore NOT JUST A BEAUTIFUL PLACE Malta is growing in stature in IT outsourcing thanks to it’s programme to generate more IT graduates PHOTO: ANYAIVANOVA/ SHUTTERSTOCK