Pan-European IT Outsourcing Intelligence Report 2011

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The Pan-European IT Outsourcing Intelligence Report 2011 presents the summary of the All-European IT Outsourcing and In-House Software Development research conducted between February and December 2011. In the course of the research the following European countries were surveyed (in alphabetical order): Austria, Cyprus, Denmark, Finland, Malta, Norway, Sweden, Switzerland, Netherlands and United Kingdom.
The key goal of the Report is to identify the differences and similarities in the ways how companies from the above listed countries behave in terms of:
 Overall adoption of IT / software development outsourcing services
 Choosing their IT outsourcing destinations
 Choosing their IT outsourcing service providers
 Responding to the most critical outsourcing challenges
 Managing their vendor relationships
 Cost saving
 Planning their future adoption of IT / software development outsourcing services

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Pan-European IT Outsourcing Intelligence Report 2011

  1. 1. IT Sourcing Europe: Nearshore IT Outsourcing Market Intelligence Pan-European IT Outsourcing Intelligence Report 2011 Coventry, UK December 20110|P age
  2. 2. Pan-European IT Outsourcing Intelligence Report 2011Executive Summary Within each group the countries will be compared and contrasted in terms of:  Top three industries that most actively adopt outsourcedThe Pan-European IT Outsourcing Intelligence Report 2011 presents the IT/software developmentsummary of the All-European IT Outsourcing and In-House Software  Top three IT outsourcing driversDevelopment research conducted between February and December  Top three IT outsourcing geographies2011. In the course of the research the following European countries  Top three IT outsourcing challengeswere surveyed (in alphabetical order): Austria, Cyprus, Denmark, Finland,  Top three IT outsourcing problem solving practicesMalta, Norway, Sweden, Switzerland, Netherlands and United Kingdom.  Top three IT outsourcing partner search tacticsThe key goal of the Report is to identify the differences and similarities in  Most outsourced areas of expertisethe ways how companies from the above listed countries behave in terms  Most popular IT outsourcing business / engagement modelsof:  Top three IT outsourcing impressions  Top three reasons keeping companies away from IT outsourcing  Overall adoption of IT / software development outsourcing  Future IT outsourcing factors and drivers services  Choosing their IT outsourcing destinations  Choosing their IT outsourcing service providers  Responding to the most critical outsourcing challenges  Managing their vendor relationships  Cost saving  Planning their future adoption of IT / software development outsourcing servicesAll countries to be analyzed in the present Report have been divided intothree groups: 1) Nordic Region (Denmark, Finland, Norway and Sweden),2) DACH, or German speaking region (Germany, Austria and Switzerland)and 3) United Kingdom, Netherlands, Malta and Cyprus.2|IT Sour cing Europe | Cop yright | All Rights Res erve d | 2011
  3. 3. Pan-European IT Outsourcing Intelligence Report 2011AcknowledgementHerewith IT Sourcing Europe expresses a heartily gratefulness to itsinformation partners – Ngi (Dutch platform for ICT professionals),Outsourcing Verband (Austrian/German/Swiss Outsourcing Association),and Outsourcing Portal (Polish web portal focused on IT Outsourcing(ITO), business process Outsourcing (BPO), knowledge processOutsourcing (KPO), HR Outsourcing (HRO), shared services etc) – for theirassistance in the localization and distribution of the 2011 European ITOutsourcing and In-House Software Development surveys’announcements, conditions and web links.Without their gratuitous help IT Sourcing Europe would not have beenable to get the sufficient research sample of participants in each certainregion polled which would have had a negative impact on the surveys’results and overall quality of trendwatching.3|IT Sour cing Europe | Cop yright | All Rights Res erve d | 2011
  4. 4. Pan-European IT Outsourcing Intelligence Report 2011ContentsIntroduction ............................................................................................... 5All-European IT Outsourcing Research 2011 .............................................. 6 Research Goals ....................................................................................... 6 Research Objectives ............................................................................... 7All-European In-House Software Development Research 2011 ................. 7 Research Goals ....................................................................................... 7 Research Objectives ............................................................................... 7Research Methodology .............................................................................. 7 Study Sample ....................................................................................... 10Part I: Nordic Region ................................................................................ 11Part II: DACH ............................................................................................ 20Part III: Cyprus, Malta, Netherlands & United Kingdom .......................... 30Conclusions & Recommendations ........................................................... 404|IT Sour cing Europe | Cop yright | All Rights Res erve d | 2011
  5. 5. Pan-European IT Outsourcing Intelligence Report 2011Introduction  From ITO buyers’ reluctance to willingness to change their service providers who fail to meet their business goals and project milestones  From dedicated development center and project-based models toDespite the last year’s predictions that the European Union is likely to more innovative business / engagement models able to providecatch up with the United States by the total IT outsourcing (ITO) contracts maximum managerial control of the outsourced projects andvalue in 2011, the factual state of affairs demonstrates a substantial transparent pricingdecline in the European outsourcing transaction volumes (both in ITO andbusiness process outsourcing (BPO)). The last Global Services Industry  From short-term cost saving goals to longer-term IT management strategic partnerships and cross-border knowledge exchangeQuarterly Report by Everest Group, one of the world’s leading  From offshoring to nearshoringoutsourcing consultancies, determines this decline to make 7% from Q220111. On the other hand, IT Sourcing Europe’s country-specific surveys With the double dip effect (or second economic downturn) expected toshow that the number of the low-value and less asset-intensive reach its peak in 2012, IT Sourcing Europe remains cautiously optimisticoutsourced IT/development projects has increased in Europe in 2011, about the future development of the European ITO market. Given thatcompared to 20102. many corporate IT leaders plan to lay off some of the in-house staff and increase ITO spending while decreasing overall IT spending, a futureThe current economic uncertainty generally leads to the transformation increase in the European ITO transactions becomes almost undisputable.of the entire ITO landscape in Western and Northern Europe. The Companies may simply have no other choice but to seek externalfollowing distinct shifts have been identified: assistance outside their home countries if the financial situation continues to worsen in the following months. Besides all, outsourcing will  From single-supplier megadeals to small multi-supplier contracts be considered as the only option to gear companies’ productivity gains in the future. Geography wise, United Kingdom remains the European leader in terms of ITO adoption: according to the recent research by Oxford1 Everest Group, “Market Vista: Global Services Industry Quarterly Report, Q3 2011,” < Economics/Business Services Association3, the UK outsourcing market ishttp://bit.ly/vb4TRf> 3 Oxford Economics/Business Services Association, “The size of the UK outsourcing market - across2 IT Sourcing Europe, “European IT Outsourcing Intelligence Reports: Austria, Cyprus, Denmark, the private and public sectors,” 2011,Finland, Germany, Malta, Netherlands, Norway, Sweden, Switzerland, United Kingdom” 2011, < http://www.bsa-org.com/documents/70 ><http://www.itsourcing-europe.com/IT_Outsourcing_Reports.html>5|IT Sour cing Europe | Cop yright | All Rights Res erve d | 2011
  6. 6. Pan-European IT Outsourcing Intelligence Report 2011currently assessed at £207bn, contributing £115bn to the UK economy growth expectations, length of outsourcing engagement, singleeach year through supplies, goods and services procured by outsourcing or multi-vendor management)firms. However, effective since January 2011, the VAT rate on all services,  Determine size of augmented IT teams and value of ITO projectsincluding outsourcing, has gone up to 20% in the UK, which increased the  Determine the most and least outsourced IT / softwarecost of most of ITO contracts. As a result of this, more UK companies development areasmove their operations to the so-called “tax heavens” such as Malta,  Benchmark the most and least preferred ITO localesGibraltar and Cyprus and continue / start outsourcing within / from theselocations.  Identify the key factors driving ITO decisions in each country polledAdditionally, the Nordic region has mobilized significantly over 2011 in  Rate different factors in terms of their importance in the choiceterms of ITO adoption. Currently, the Nordic outsourcing market is valued of ITO destination and service providerat over €5bn of which around 50% belongs in Sweden and the rest is  Identify the key ITO issues and problem solving best practicesequally distributed across Denmark, Norway and Finland4.  Find out how ITO buyers search for their ITO partners  Determine the general profile of ITO service providers  Determine the most and least popular ITO business / engagement models in each country polled All-European IT Outsourcing Research 2011  Benchmark ITO buyers’ dependence / independence from service providers with regards to personnel selection and salaries’ negotiation  Measure the level of satisfaction with ITO service providers asResearch Goals well as overall impressions of ITO engagements  Compare and contrast the actually incurred versus contracted  Identify the general profile of ITO buyers in each respective costs of ITO engagements country surveyed (company size, industry, annual revenue  Assess the overall savings from ITO engagements  Determine future ITO plans of current ITO buyers4 Burnt Oak Partners, “Nordic outsourcing market heats up,” 2011, <http://www.burntoak-partners.com/2011/09/01/nordic-outsourcing-market-heats-up/>6|IT Sour cing Europe | Cop yright | All Rights Res erve d | 2011
  7. 7. Pan-European IT Outsourcing Intelligence Report 2011Research Objectives  Rate different factors by their importance in the future choice of ITO hubs and partners  Get an in-depth understanding of the current ITO demands and Research Objectives trends in each country surveyed  Help current ITO buyers compare own ITO strategy and problems against those of their industry peers  Help today’s non-outsourcing companies compare own in-house  Help current ITO buyers revise and/or improve their current ITO development / IT issues and problem solving techniques with engagements / business models based on the industry best those of their industry peers practices  Determine key concerns and fears that prevent today’s non- outsourcing companies from adopting ITO services and make ITO service providers aware of these concernsAll-European In-House Software DevelopmentResearch 2011 Research MethodologyResearch Goals Both IT Outsourcing and In-House Software Development surveys were  Determine current level of satisfaction with the outcomes of the designed and hosted by SurveyMonkey, the world’s leading provider of in-house software development / IT function management web-based survey solutions.  Identify major challenges of the in-house development that may lead companies to adopt outsourcing in the future The IT Outsourcing survey was comprised of 25 questions divided into 8  Identify the major factors that currently prevent companies from question blocks. The In-House Software Development survey was adopting the outsourced development / IT comprised of 13 questions divided into 4 question blocks. The following  Identify circumstances that are likely to drive companies to adopt types of questions were used in both surveys: M-C - multiple-choice (only ITO in the future one answer), multiple-choice (multiple answers) and M/C - matrix of choices. Some multiple-choice questions contained an open-ended  Identify ITO locales that seem to be most and least attractive for today’s non-outsourcers7|IT Sour cing Europe | Cop yright | All Rights Res erve d | 2011
  8. 8. Pan-European IT Outsourcing Intelligence Report 2011response option that was included as the answer “other” in the actualanalysis of responses (see Table 1). Where do you outsource your M-C (multiple software work? answers)Table 1. Question blocks & types What are the TOP THREE factors M-C (multiple that drove your companys answers) Block Question Type decision to outsource IT? IT Outsourcing Survey What is your company size M-C (1 answer) Rate the following factors in M/C (1 answer per (headcount)? Outsourcing Drivers terms of their importance in your row) & Factors choice of the outsourcing What is your primary industry? M-C (multiple destination answers)Respondents’ profile What revenue growth are you M-C (1 answer) Rate the following factors in M/C (1 answer per expecting in 2011? terms of their importance in your row) choice of the outsourcing partner Do you currently outsource any M-C (1 answer) element of your corporate IT What are the TOP THREE M-C (multiple function /software development? challenges of your outsourced answers) Outsourcing IT/development? What is your overall IT M-C (1 answer) Challenges outsourcing experience? How do you respond to your M-C (multiple current challenges? answers) If you do staff augmentation, M-C (1 answer) what is the size of your current How did you find your current M-C (multiple outsourced team(s)? ITO partner(s)? answers) If you do project outsourcing, M-C (1 answer) What size is your major ITO M-C (1 answer)Outsourcing what is the value of your partner (headcount)?Behavior project(s) (in €)? What business model do you use M-C (multiple Vendor Relations for your outsourced answers) What area of expertise does your M-C (multiple outsourced software answers) development? development fall into? Who decides on your outsourced M-C (multiple Do you multi-source? M-C (1 answer) development teams structure answers)8|IT Sour cing Europe | Cop yright | All Rights Res erve d | 2011
  9. 9. Pan-European IT Outsourcing Intelligence Report 2011 and members? IT/software products? Do you know the exact salaries of M-C (multiple If you have an in-house IT team, M-C (1 answer) each of your employee on the answers) In-House Software what size is it (headcount)? outsourced development team? Development Behavior What part of your corporate M-C (1 answer) Evaluate your current level of M-C (1 answer) budget is spent on IT/software satisfaction with the outsourced development? services provided Are you satisfied with your in- M-C (1 answer) How do actual incurred annual M-C (1 answer) house development outcomes? costs of the outsourced development compare to the What are the TOP THREE M-C (multiple expected (contracted) costs? challenges of your in-house answers)Outsourcing Costs Challenges of In- software development? What are your actual savings M-C (1 answer) House Development from the outsourced software How do you respond to current M-C (multiple development versus the in-house challenges? answers) development? Factors Keeping What are the TOP THREE factors M-C (multiple What are your general M-C (multiple Away from that keep your company away answers)Impressions of ITO impressions of the outsourced answers) Outsourcing from ITO? software development? Rate each circumstance below in M/C (1 answer per Do you plan to continue M-C (1 answer) terms of your companys row) outsourcing your software likelihood to begin outsourcing development? IT/development in the futureFuture OutsourcingPlans In the future, where would you M-C (multiple Where would you outsource your M-C (multiple outsource your software answers) software development / IT in the answers) development? future? Future Adoption of Outsourcing Rate the following factors in M/C (1 answer per In-House Software Development Survey terms of their importance in your row) How do you currently M-C (multiple future choice of ITO destination develop/manage your answers)9|IT Sour cing Europe | Cop yright | All Rights Res erve d | 2011
  10. 10. Pan-European IT Outsourcing Intelligence Report 2011 Rate the following factors in M/C (1 answer per terms of their importance in your row) future choice of the ITO partner If you decide to outsource IT / M-C (multiple software development in the answers) future, how would you search for your outsourcing partner? Do you plan to outsource any M-C (1 answer) part of your IT function / software development in 2011?Study SampleThe following number of companies took part in IT Sourcing Europe’ssurveys in each country surveyed: Country # of outsourcers # of non- Total # of outsourcers participants Austria 320 213 533 Cyprus 129 100 229 Denmark 434 240 674 Germany 140 164 304 Malta 78 76 154 Netherlands 216 240 456 Norway 285 206 491 Switzerland 422 181 603 Sweden 192 287 479United Kingdom 387 342 729 Grand Total 2603 2049 465210 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  11. 11. Pan-European IT Outsourcing Intelligence Report 2011Part I: Nordic Region Figure 1: Top 3 industries that most actively use ITO services in 2011 Figure 2: Top 3 outsourced project areas11 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  12. 12. Pan-European IT Outsourcing Intelligence Report 2011 Figure 3: Multi-sourcing vs single-sourcing Figure 4: Top 3 IT outsourcing geographies12 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  13. 13. Pan-European IT Outsourcing Intelligence Report 2011 Figure 5: IT Outsourcing projects value (€) Figure 6: Top 3 IT Outsourcing drivers13 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  14. 14. Pan-European IT Outsourcing Intelligence Report 2011 Figure 7: Top 3 IT Outsourcing Challenges Figure 8: Top 3 Responses to Challenges14 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  15. 15. Pan-European IT Outsourcing Intelligence Report 2011 Figure 9: Top 3 IT Outsourcing Destination Selection Criteria Figure 10: Top 3 IT Outsourcing Partner Selection Criteria15 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  16. 16. Pan-European IT Outsourcing Intelligence Report 2011 Figure 11: Top 3 IT Outsourcing Partner Search Tactics Figure 12: Top 3 IT Outsourcing Engagement Models16 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  17. 17. Pan-European IT Outsourcing Intelligence Report 2011 Figure 13: ITO Buyers’ Involvement in HR Selection on Vendor’s Figure 14: ITO Buyers’ Involvement in Salary Negotiations with Project Side Team Members on Vendor’s Side17 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  18. 18. Pan-European IT Outsourcing Intelligence Report 2011 Figure 15: ITO Buyers’ General Satisfaction with Their Service Figure 16: Top 3 Impressions of IT Outsourcing Providers18 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  19. 19. Pan-European IT Outsourcing Intelligence Report 2011 Figure 17: Top 3 Factors Preventing Companies from IT Outsourcing Figure 18: Top 3 Factors Likely to Influence Companies’ IT Outsourcing Decisions in the Future19 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  20. 20. Pan-European IT Outsourcing Intelligence Report 2011Part II: DACH Figure 1: Top 3 Industries that Most Actively Use ITO Services in 2011 Figure 2: Top 3 Outsourced Project Areas 20 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  21. 21. Pan-European IT Outsourcing Intelligence Report 2011 Figure 3: Multi-sourcing vs Single-sourcing Figure 4: Top 3 IT Outsourcing Geographies21 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  22. 22. Pan-European IT Outsourcing Intelligence Report 2011 Figure 5: IT Outsourcing Projects Value (€) Figure 6: Top 3 IT Outsourcing Drivers22 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  23. 23. Pan-European IT Outsourcing Intelligence Report 2011 Figure 7: Top 3 IT Outsourcing Challenges Figure 8: Top 3 Responses to Challenges23 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  24. 24. Pan-European IT Outsourcing Intelligence Report 2011 Figure 9: Top 3 IT Outsourcing Destination Selection Criteria Figure 10: Top 3 IT Outsourcing Partner Selection Criteria24 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  25. 25. Pan-European IT Outsourcing Intelligence Report 2011 Figure 11: Top 3 IT Outsourcing Partner Search Tactics Figure 12: Top 3 IT Outsourcing Engagement Models25 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  26. 26. Pan-European IT Outsourcing Intelligence Report 2011Figure 13: ITO Buyers’ Involvement In HR Selection On Vendor’s Side Figure 14: ITO Buyers’ Involvement In Salary Negotiations With Project Team Members On Vendor’s Side26 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  27. 27. Pan-European IT Outsourcing Intelligence Report 2011 Figure 15: ITO Buyers’ General Satisfaction With Their Service Figure 16: Top 3 Impressions of IT Outsourcing Providers27 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  28. 28. Pan-European IT Outsourcing Intelligence Report 2011Figure 17: Top 3 Factors Preventing Companies From IT Outsourcing Figure 18: Top 3 Factors Likely To Influence Companies’ IT Outsourcing Decisions In The Future28 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  29. 29. Pan-European IT Outsourcing Intelligence Report 2011 networks to single topics such as Shared Services or as representation of markets / outsourcing destinations Goal is to represent the interests of the respective market segments, topics, branches or locations in an independent, collaborative manner. Usual tasks are for instance: representation within our markets, publishing respective information, reviewing information, establishing partnerships, building networks and supporting the knowledge transfer by organising workshops, seminars, webinars and webcasts. The membership with the councils is for professionals free of charge,The German Austrian Swiss Outsourcing Association (Deutscher Outsourcing Verband e.V.) organizations can support the work of the councils with a sustaining membership.represents the interests of outsourcing professionals and organizations and is anindependent partner of outsourcing users, consultants and service providers in Germany, The Outsourcing JournalAustria and Switzerland. The Outsourcing Journal is THE independent news and information services about BPO,Mission ITO and Shared Services in Germany, Austria and Switzerland. It provides exclusive information, company news, professional articles, interviews, best practices, studies,The main goal of the Association is to further influence the market for outsourcing market data, reports and much more for outsourcing professionals in Germany, Austria,services - BPO, ITO and SSC - in the DACH region. The development of dedicated Switzerland and beyond. > www.outsourcing-journal.orgcommunication channels and media, a massive expansion of the communication withinthe market and the available information as well as the installation of an independent Public Relationsplatform for maintaining and extending the network were identified as key aspects of thework of the association. Market attendees can take advantage of the network and communication channels of the association and get support in their public relations and communication efforts. TheIn 2011 the association has established several councils and local representations as well association offers via its PR agency professional and market fit services.as relationships with the key organizations and leading professional. Further the > www.outsourcing-marketing.orgassociation has actively supported the main industry events and published almost 400articles with special relevance to the DACH markets for outsourcing services. Partner ProgramNetwork and Councils The partner program opens professionals and corporates the opportunity to support the market and to gain access to first-hand information and an independent network. FurtherGood co-operation is built on good contacts. Therefore the association aims to establish the program supports corporate partners and members actively in their marketing andgood relationships with knowledge carriers, business leaders and other independent public relations efforts in the DACH region.organizations, both on national and on international level. Further the association offersfree presentation services and moderates open groups on social / business networks. For further information please visit www.outsourcing-verband.org/en or contact Mr. Stephan Fricke at s.fricke@outsourcing-verband.orgThe association has established interest groups - councils - that act as knowledge29 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  30. 30. Pan-European IT Outsourcing Intelligence Report 2011Part III: Cyprus, Malta, Netherlands & United Kingdom Figure 1: Top 3 Industries That Most Actively Use ITO Services In Figure 2: Top 3 Outsourced Project Areas 201130 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  31. 31. Pan-European IT Outsourcing Intelligence Report 2011 Figure 3: Multi-sourcing vs Single-sourcing Figure 4: IT Outsourcing Projects Value (€)31 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  32. 32. Pan-European IT Outsourcing Intelligence Report 2011 Figure 5: Top 3 IT Outsourcing Geographies Figure 6: Top 3 IT Outsourcing Drivers32 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  33. 33. Pan-European IT Outsourcing Intelligence Report 2011 Figure 7: Top 3 IT Outsourcing Challenges Figure 8: Top 3 Responses to Challenges33 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  34. 34. Pan-European IT Outsourcing Intelligence Report 2011 Figure 9: Top 3 IT Outsourcing Destination Selection Criteria Figure 10: Top 3 IT Outsourcing Partner Selection Criteria34 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  35. 35. Pan-European IT Outsourcing Intelligence Report 2011 Figure 11: Top 3 IT Outsourcing Partner Search Tactics Figure 12: Top 3 IT Outsourcing engagement models35 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  36. 36. Pan-European IT Outsourcing Intelligence Report 2011Figure 13: ITO Buyers’ Involvement In HR Selection On Vendor’s Side Figure 14: ITO Buyers’ Involvement In Salary Negotiations With Project Team Members On Vendor’s Side36 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  37. 37. Pan-European IT Outsourcing Intelligence Report 2011 Figure 15: ITO buyers’ general satisfaction with their service Figure 16: Top 3 impressions of IT Outsourcing providers37 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  38. 38. Pan-European IT Outsourcing Intelligence Report 2011Figure 17: Top 3 Factors Preventing Companies From IT Outsourcing Figure 18: Top 3 Factors Likely To Influence Companies’ IT Outsourcing Decisions In The Future38 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  39. 39. Pan-European IT Outsourcing Intelligence Report 2011Ngi, the Dutch Computer Society, represents 2,500 ICT Contact Details:professionals. Ngi is a non-profit organisation seeking to improve Postbus 1058and promote high standards among Informatics Professionals in 3860 BB Nijkerkrecognition of the impact that Informatics has on employment, Netherlands Web: https://www.ngi.nlbusiness and society. Email: info.ngi@ngi.nlNgi is a member of IFIP (International Federation for Information Tel.: 033 247 3427Processing) and CEPIS (Council of European ProfessionalInformatics Societies).39 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  40. 40. Pan-European IT Outsourcing Intelligence Report 2011 9. The majority of ITO buyers in Europe are not involved in salary Conclusions & Recommendations negotiations with their project team staff on vendor’s side, which marks a high level of hidden agenda in ITO transactions 10. The majority of ITO buyers in Europe are either somewhat satisfied, or just satisfied with their service providersThe following IT outsourcing behavior patterns common for all Europeanregions surveyed have been observed in the course of the 2011 All- The following IT outsourcing concerns common for all European regionsEuropean IT Outsourcing and In-House Software Development Research: surveyed have been identified in the course of the 2011 All-European IT Outsourcing and In-House Software Development Research: 1. IT (software) industry demonstrates the highest demand for IT outsourcing services 1. Poor communication with project teams and/or management on 2. Web development is the most outsourced area of expertise vendor’s side 3. Nearshoring is the most popular geography of outsourcing in 2. Actual incurred costs exceed or far exceed the expected Europe (contracted) costs 4. 2011 has been the year of small ITO projects (up to €50K) 3. Loss of managerial control of corporate IT / development projects 5. Cost reduction remains the major driver of corporate decisions to in case of outsourcing outsource IT /development in Europe 6. When choosing their ITO hubs, European companies make sure To keep their current and future customers satisfied with their ITO they have a vast pool of IT talent with an excellent command in outcomes, ITO service providers should revise and update their models of foreign languages (e.g. English) engagement to allow a better project scrutiny and control on client’s side 7. When searching for potential ITO service providers, European and more transparent pricing structures to ensure more predictable companies rely most on own online research and vendor longer-term ITO budgets. Additionally, it is highly recommended that ITO references from their market peers service providers look beyond their Service Level Agreements and 8. The project-based and Managed / Own Development (Agile, develop a set of value-added services to proactively meet their clients’ SCRUM etc) Team models are the most popular engagement business needs in today’s hectic and rapidly changing business models in Europe environment.40 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  41. 41. Pan-European IT Outsourcing Intelligence Report 201141 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1
  42. 42. Pan-European IT Outsourcing Intelligence Report 2011 Our Contacts:About IT Sourcing Europe The Meridian, 4 Copthall House, Station Square Coventry, West Midlands, CV1 2FL United KingdomIT Sourcing Europe is a UK-based market intelligence company specialized Email: info(at)itsourcing-europe.comin European IT Outsourcing research and advisory. Tel.: +44(0)2476992505 Web: www.itsourcing-europe.com Blog: http://itsourcingeurope.wordpress.comIT Sourcing Europe provides: Facebook: http://www.facebook.com/pages/It-Sourcing- Europe/136082959822709  Top quality quantitative and qualitative IT Outsourcing market Follow our tweets @ITSourcingEurop research and fieldwork services  Evaluation of Central and Eastern Europes IT Outsourcing SlideShare: http://www.slideshare.net/itsourcingeurope services providers and their factual capabilities to deliver innovative technological solutions on time and on budget  Free consulting services for European companies planning to You are free to use, share and/or remix any part of this work as long as you outsource IT / software development functions and / or change attribute it to IT Sourcing Europe© their current IT Outsourcing strategy / engagement  Ad-Hoc IT Outsourcing strategy development and full-cycle Information contained in this publication has been compiled from sources believed to be reliable, but the accuracy of this information is not guaranteed. IT Sourcing Europe support disclaims all warranties and conditions with regard to the content, express or implied, including warranties of merchantability and fitness for a particular purpose, nor assumesIT Sourcing Europe cooperates with several European ICT and any legal liability for the accuracy, completeness, or usefulness of any informationOutsourcing organisations in terms of free analytics / information contained herein. Any reference to a commercial product, process, or service does not imply or constitute an endorsement of the same by IT Sourcing Europe.exchange. Amongst its major information partners are OutsourcingVerband, Das Outsourcing Journal, Outsourcing Portal, NGI and others. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed for free with the understanding that IT Sourcing Europe is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.42 | I T S o u r c i n g E u r o p e | C o p y r i g h t | A l l R i g h t s R e s e r v e d | 2 0 1 1

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