The document discusses the evolution of IT outsourcing and the importance of trusted partnerships. It outlines factors to consider when outsourcing such as quality, price, reputation, business culture compatibility, and location. The document also examines outsourcing models including shared ownership, portfolio ownership and product ownership. It notes trends like more automation replacing cheap labor and increased verticalization. Indian providers are stepping up their capabilities while Eastern Europe offers benefits like cultural similarities and low attrition rates. Nearshoring provides advantages like similar legal regulations and no visa requirements. Outsourcing is growing with over 2.4 million US jobs outsourced in the last decade and security outsourcing on the rise. Trusted partnerships are key for successful outsour

1. The Evolution of IT
Outsourcing - Why Trusted
Partnership Matters?
by Olha Moroz
Delivery Director, SoftServe Poland

2. Outsourcing for Buyer
• Talents, expertise
• Price
• Hiring and staffing
speed
• Free own resources
• Less attention to
support • Less control
• Communication can cause
problems
• Language barrier issues
• Security issues

3. Factors to Consider
Quality
Price
Taxes
Reputation
Business
culture
compatibility
Location
Understanding
goals
Constant
management of
the business
relationship
Well-written
contracts
Strong
communication
Language
Labor pool's
skill and size
Security and
privacy
Local education
systems ability to
support the labor
pool
Legal culture and
stability of a
country

4. Outsourcing for Seller
• IT outsourcing: from
infrastructure to
software development,
maintenance and
support
• Non-core/Non-
strategic business
elements
• No visibility on
products roadmap
• Difficult to get product
ownership

5. Maslow's Hierarchy of Needs
• Self-actualization
• Esteem needs
• Belongingness
and love needs
• Safety needs
• Biological and
psychological
needs

6. Types of Business Models
• Shared Business Ownership
• Portfolio Ownership
• Product Ownership
• Solution provider
• Team extension
• FTE Provider

7. From FTE
To outcome
based:
- business goals
- tangible metrics
- for user
Evolution of Outsourcing Pricing
Models

8. What Clients Need?
Link the benefits of procuring IT services
from third party providers to the realization
of business objectives

9. Output and Outcome Based Service Delivery and
Commercial Models (Cognizant)

10. Managed Service Model
• Management responsibilities
• BOT model
• VAS

11. Verticalization
Many clients are looking for more vertical
expertise

12. Technical Product Management
• Product strategy
• Release planning
• Technology selection
• Backlog creation
• End-to-end UI design
• Execution ownership
• Influence on decision
making
• Customer representative

13. Contract
• Contract type
• Team distribution
• Contract duration
• Renegotiation
• Model based pricing

14. Multiple Vendors
• Competing vendors
• Access to internal
information
• Shared goal and
agreements

15. Access to Client’s Internal Environment
• Infrastructure
• Procedures and
Policies
• Alignment on
management level

16. The Sourcing Decision Becomes Data-
Driven

17. Crowdsourcing
• Idea generation
• Design for a
prototype
• Talent
• Quick feedback
• Low cost
• No management
• Marketing
• Low risk
• Quality
• Lack of Motivation
• Keeping Secrets
• Ethical, Legal
• Who is the owner?

18. More Automation, Less Cheap Labor in
IT outsourcing
• Cloud and virtualization
• Robot-like technologies
• More human judgement
and experience

20. Indian Providers are Stepping Up
• Low cost
• English
• Big population
Tata Consultancy Services,
Infosys, Wipro, HCL, Tech
Mahindra
• Labor turnover
• “Yes Sir” culture
• More management
• Time Zone

21. Eastern Europe
• Quality vs Quantity - the
benefits of outsourcing
to Eastern Europe
• The availability of a
highly educated
workforce
• Business culture
• Cultural similarities
• Time zones
• Low attrition rates

22. Nearshore
• Domestic sourcing is a
plus
• Predictability in political
situation
• Language, culture, time
zone
• Salaries management
• No need in H-1B and L1
visas
• Similar legal regulations

23. Factors to Consider
Quality
Price
Taxes
Reputation
Business
culture
compatibility
Location
Understanding
goals
Constant
management of
the business
relationship
Well-written
contracts
Strong
communication
Language
Labor pool's
skill and size
Security and
privacy
Local education
systems ability to
support the labor
pool
Legal culture and
stability of a
country

24. Factors to Consider
Quality
Price
Taxes
Reputation Business
culture
compatibility
Location
Understanding
goals
Constant
management of
the business
relationship
Well-written
contracts
Strong
communication
Language
Labor pool's
skill and size
Security and
privacy
Local education
systems ability to
support the labor
pool
Legal culture and
stability of a
country

25. Factors to Consider
Quality
Price
Taxes
Reputation Business
culture
compatibility
Location
- onsite
Understanding
goals
Constant
management of
the business
relationship
Well-written
contracts
Strong
communication
Language
Labor pool's
skill and size
Security and
privacy
Local education
systems ability to
support the labor
pool
Legal culture and
stability of a
country

26. Factors to Consider
Quality
Price
TaxesReputation Business
culture
compatibility
Location
Understanding
goals
Constant
management of
the business
relationship
Well-written
contracts
Strong
communication
Language
Labor pool's
skill and size
Security and
privacy
Local education
systems ability to
support the labor
pool
Legal culture and
stability of a
country
Product
Ideation
Innovative
Solutions
Value added
services
Subject matter
expertise
Domain, market,
competitors
knowledge
End user
representative
Data as an asset
Shared goals and
outcomes

27. Popularity of Outsourcing

28. Expenses on Outsourcing

29. Trends
• More than 2.4 million jobs outsourced from the US in last 10
years
• 28% of whole outsourcing is IT
• Large companies continue to be the leaders in outsourcing,
spending a median average of 7.8% of their IT budgets on it
• Application hosting is the most popular function to outsource,
with 62% of organizations doing it
• IT security outsourcing is increasing
• 48% companies plan to hire more outsourcers than full time
employees in next 12-18 months
• Offshore outsourcing to grow by more than 20% annually

30. Trusted Partnership

31. Thank you
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