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Test Outsourcing in
Eastern Europe
Agenda
• What is outsourcing?
• The outsourcing market – facts and figures
• Marketplace of Eastern Europe (EE)
• Advantag...
Agenda
• What is outsourcing?
• The outsourcing market – facts and figures
• Marketplace of Eastern Europe (EE)
• Advantag...
What is Outsourcing?
“Process of contracting the company’s business process and
operations to an external company. It is e...
The outsourcing market
Why did it start?
• Cost cuttings
• Focus on the core business
What can be outsourced?
• Everything...
Outsourcing models
• Offshoring
• Outside the home country.
• Risks due to language barriers, cultural differences and dif...
44%
34%
34%
28%
22%
15%
15%
9%
0% 10% 20% 30% 40% 50%
Reduce operation costs
Overcome IT talent shortage
Free up internal ...
Risks
Top 3 reasons why projects fail
1. No process for specifying the work to be done.
2. Poor project management.
3. No ...
Fiascos
Client What When Cost
UK Government National Program
for IT
2002-2011 12bn
pounds
U.S. Navy Manage 350,000
Navy an...
Success stories
25 successful Startups built with outsourced development
Agenda
• What is outsourcing?
• The outsourcing market – facts and figures
• Marketplace of Eastern Europe (EE)
• Advantag...
Outsourcing 2015
World Quality Report 2014 - 2015
AT Kearney: Outsourcing Market 2015
AT Kearney: Outsourcing Market 2015
Agenda
• What is outsourcing?
• The outsourcing market – facts and figures
• Marketplace of Eastern Europe (EE)
• Advantag...
Europe Market
Ernst & Young Report 2014
Europe Market
1. Krakow, Poland
2. Dublin, Ireland
3. Prague, Czech Republic
4. Budapest, Hungary
5. Brno, Czech Republic
...
Examples: Poland
• Has Risen from 38th in 2009 to 11th now;
• Krakow in Top 10 Locations and #1 in Europe;
• More than 500...
Examples: Bulgaria
• Ranked 9th in the world and best in Europe;
• EOA Award „Offshoring Destination of The Year“ for 2015...
Agenda
• What is outsourcing?
• The outsourcing market – facts and figures
• Marketplace of Eastern Europe (EE)
• Advantag...
Advantages of EE
"There's a lot more to it than just where
are the cheap people?'"
Rolf Jester
Gartner Vice President
Advantages of EE
Why a preferred destination?
• Education based on the Western system of theory and
philosophy - Creative ...
Advantages of EE
• Reduced time differences – almost same working hours;
• Less cultural differences and common values sha...
Agenda
• What is outsourcing?
• The outsourcing market – facts and figures
• Marketplace of Eastern Europe (EE)
• Advantag...
Future Trends
“It is expected that by the end 2015 top six EU markets
alone will need 250 000 extra employees with IT skil...
Future Trends
• The shift away from “cheaper is better” - quality is again the
crucial differentiator.
• Therefore Nearsho...
Future Trends
Expansion of offshore providers in Europe
• Investing heavily in continental Europe:
• Wipro announced the a...
Future Trends
Expansion of nearshore providers in Europe
• Investing in Eastern Europe:
• Luxoft opened a new site in Bulg...
Future Trends
Freelance Outsourcing
• Physical location is irrelevant.
• SME companies now can take advantage of the talen...
Trends in Testing
Testing Budget allocation as percentage of IT spend
World Quality Report 2015 - 2016
Trends in Testing
World Quality Report 2014 - 2015
SMAC and IoT increase the importance of Testing
Trends in Testing
World Quality Report 2014 - 2015
World is going AGILE! What about Testing?
Trends in Testing
World Quality Report 2014 - 2015
Test Automation is the Future
Trends in Testing
• Contracting a single vendor to provide both development and
testing:
• can reduce supplier management ...
Trends in Testing
• Skill level baselines must be demonstrated:
• If your skills fall behind, you become noncompetitive.
•...
Questions?
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Test Outsourcing in Eastern Europe

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Доклад Mitko Mitev на конференции SQA Days-18, 27-28 ноября 2015 г., Москва www.sqadays.com

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Test Outsourcing in Eastern Europe

  1. 1. Test Outsourcing in Eastern Europe
  2. 2. Agenda • What is outsourcing? • The outsourcing market – facts and figures • Marketplace of Eastern Europe (EE) • Advantages of EE • Future trends
  3. 3. Agenda • What is outsourcing? • The outsourcing market – facts and figures • Marketplace of Eastern Europe (EE) • Advantages of EE • Future trends
  4. 4. What is Outsourcing? “Process of contracting the company’s business process and operations to an external company. It is expected to be done with a better quality.”
  5. 5. The outsourcing market Why did it start? • Cost cuttings • Focus on the core business What can be outsourced? • Everything • It does not happen due to security risks
  6. 6. Outsourcing models • Offshoring • Outside the home country. • Risks due to language barriers, cultural differences and different time-zones. • Usually selected because of cheaper labor costs. • Onshoring • Same country. • It involves less risks but doesn’t allow saving up much. • Nearshoring • Outsourcing in nearby countries. • Considered best for West Europe who prefer the East European destinations.
  7. 7. 44% 34% 34% 28% 22% 15% 15% 9% 0% 10% 20% 30% 40% 50% Reduce operation costs Overcome IT talent shortage Free up internal resources Focus on core business functions Accelerate company transformation Accelerate projects Gain access to management expertise Reduce time to market Reasons to Outsource
  8. 8. Risks Top 3 reasons why projects fail 1. No process for specifying the work to be done. 2. Poor project management. 3. No metrics for measuring success. Unless you solve the first one, then being excellent at the other two won't make a difference. Forrester Reports
  9. 9. Fiascos Client What When Cost UK Government National Program for IT 2002-2011 12bn pounds U.S. Navy Manage 350,000 Navy and Marine Corps users 2003 $4 bn US Air force Expeditionary Combat Support System 2005-2012 $1.1 bn US Government Healthcare exchange website 2012-2014 $200 mln
  10. 10. Success stories 25 successful Startups built with outsourced development
  11. 11. Agenda • What is outsourcing? • The outsourcing market – facts and figures • Marketplace of Eastern Europe (EE) • Advantages of EE • Future trends
  12. 12. Outsourcing 2015 World Quality Report 2014 - 2015
  13. 13. AT Kearney: Outsourcing Market 2015
  14. 14. AT Kearney: Outsourcing Market 2015
  15. 15. Agenda • What is outsourcing? • The outsourcing market – facts and figures • Marketplace of Eastern Europe (EE) • Advantages of EE • Future trends
  16. 16. Europe Market Ernst & Young Report 2014
  17. 17. Europe Market 1. Krakow, Poland 2. Dublin, Ireland 3. Prague, Czech Republic 4. Budapest, Hungary 5. Brno, Czech Republic 6. Warsaw, Poland 7. St. Petersburg, Russia 8. Bucharest, Romania 9. Belfast, UK 10. Bratislava, Slovakia Tholons Report Dec 2014
  18. 18. Examples: Poland • Has Risen from 38th in 2009 to 11th now; • Krakow in Top 10 Locations and #1 in Europe; • More than 500 institutions of high education; • IT business doubled in the last 5 years; • Multilingual; • Proximity to Western Europe; • Still cost-competitive by several magnitudes; • Considered with potential to become Global player;
  19. 19. Examples: Bulgaria • Ranked 9th in the world and best in Europe; • EOA Award „Offshoring Destination of The Year“ for 2015; • Growth of Outsourcing since 2005 – 500%; • Growth of IT employees since 2010 – 330%; • Among Top 10 countries with fastest Internet worldwide (8th); • 3rd worldwide by the number of certified IT professionals; • Lowest Cost in Europe – both Salaries and Taxes;
  20. 20. Agenda • What is outsourcing? • The outsourcing market – facts and figures • Marketplace of Eastern Europe (EE) • Advantages of EE • Future trends
  21. 21. Advantages of EE "There's a lot more to it than just where are the cheap people?'" Rolf Jester Gartner Vice President
  22. 22. Advantages of EE Why a preferred destination? • Education based on the Western system of theory and philosophy - Creative thinking; • Low cost – competitive salaries and taxes; low cost of living; • Highly technical skills; • Languages – Not only High level of English, but German, French, Spanish, etc.; • Reliable, existing infrastructure; • Companies in Eastern Europe tend to engage in the business model of their client;
  23. 23. Advantages of EE • Reduced time differences – almost same working hours; • Less cultural differences and common values shared; • No “Yes, sir” attitude; • Less employee turnover than India; • The growing SME demand needs flexibility; • For the countries in EU – advantage of the VAT system and the well known EU rules and regulations. Other very important benefits:
  24. 24. Agenda • What is outsourcing? • The outsourcing market – facts and figures • Marketplace of Eastern Europe (EE) • Advantages of EE • Future trends
  25. 25. Future Trends “It is expected that by the end 2015 top six EU markets alone will need 250 000 extra employees with IT skills, and this doesn’t cover the rapidly and instantly expanding US job market.” Source: computerweekly.com
  26. 26. Future Trends • The shift away from “cheaper is better” - quality is again the crucial differentiator. • Therefore Nearshoring is gathering pace within higher cost but with high-talent labor. • Gartner: “This trend will result in outsourcing of IT services overseas (India etc.) dropping by at least 15% through to 2016”. Outsourcing moves into Strategic activities
  27. 27. Future Trends Expansion of offshore providers in Europe • Investing heavily in continental Europe: • Wipro announced the addition of 500 FTEs in the Nordics alone over the coming 3 years reaching > 4000 FTEs in Europe. • Offshore providers are also on the acquisition trail: • Cognizant acquired ValueSource NV in Belgium. • Have already acquired six companies in Germany.
  28. 28. Future Trends Expansion of nearshore providers in Europe • Investing in Eastern Europe: • Luxoft opened a new site in Bulgaria in 2015. Ambition to hire up to 1000 FTEs. • Already have labs in other EE countries like Romania. • SoftServe also opened a R&D site in Bulgaria. • EPAM has an office both in Romania and Bulgaria. • Massive Marketing and Sales representation in Europe.
  29. 29. Future Trends Freelance Outsourcing • Physical location is irrelevant. • SME companies now can take advantage of the talent. • No need for cumbersome long-term agreements. • No need of large volume requirements. • New countries with talent but with strong operational risk are now able to take part in the industry. • Bigger talent pool than India, China and Mexico altogether. • Russia and Ukraine lead by far. Romania follows.
  30. 30. Trends in Testing Testing Budget allocation as percentage of IT spend World Quality Report 2015 - 2016
  31. 31. Trends in Testing World Quality Report 2014 - 2015 SMAC and IoT increase the importance of Testing
  32. 32. Trends in Testing World Quality Report 2014 - 2015 World is going AGILE! What about Testing?
  33. 33. Trends in Testing World Quality Report 2014 - 2015 Test Automation is the Future
  34. 34. Trends in Testing • Contracting a single vendor to provide both development and testing: • can reduce supplier management costs, but • it is unlikely to deliver the best business value. • Using a independent provider for testing gives clear reassurance of an independent auditor with no interest in: • completing testing too quickly, or • finding an encouragingly small number of defects. Increased demand for independent testing supplier
  35. 35. Trends in Testing • Skill level baselines must be demonstrated: • If your skills fall behind, you become noncompetitive. • Not acceptable in an outsourced world. • Certifications become mandatory for outsourcing providers: • Required in most of the tenders. • ISTQB is closing on 500 000 Certified Testers: • Agile Testing is out. • Security and Test Automation in Beta. • Working on Mobile and Usability testing. Importance of Certifications grows
  36. 36. Questions?

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