2. WHAT IS IT?
This is a marketing study which aims to help US technology companies choose a global location for outsourced software development.
3. HOW WE DID IT?
500+ COMPANIES WORLD-WIDE HAVE READ 2013's GLOBAL TALENT MAP
•200+ software development service providers worldwide evaluated
•300+ developers interviewed worldwide
•20+ Gartner reports researched
•1000sof web pages googled and read
•10+ gallons of coffee consumed to get and present valid data
4. 1 OUT OF 2 COMPANIES OUTSOURCES
43% Percent of technology companies in US outsource
2,637,239Total number of U.S. jobs outsourced
Source: Statistic Brain.
TOP 4 reasons why companies outsource
5. TOP 30 OUTSOURCING LOCATIONS
Gartner's list of leading locations to offshore IT services.
Argentina
Brazil
Chile
Colombia
Costa Rica
Mexico
Peru
Uruguay
Source: Gartner, Inc.
Bangladesh
China
India
Indonesia
Malaysia
Philippines
Sri Lanka
Thailand
Vietnam
Belarus
Bulgaria
Czech Republic
Hungary
Poland
Romania
Russia
Slovakia
Ukraine
Mauritius
Morocco
South Africa
Turkey
Americas
Asia/Pacific
Central & Eastern Europe
Africa & Middle
East
7. REGIONAL LEADERS
Americas
Mexicoservers 50.2% of businesses offshoring IT to the region, while Brazil has 46.8% and Argentina22.1% and Colombiagoes 4th.
In Asia/Pacific 48.5% of IT services buyers get services from Indiawith Chinaclose behind with 45.9% and Malaysia(13.9%) with Philippines and Vietnam.
The CEE's biggest offshore service providers are Ukraine, Russia, Poland, Czech Republic and Romania.
Asia
Central and Eastern Europe
Source: Gartner, Inc.
8. CRITERIA NOT COVERED BY GARTNER
Cultural Compatibility
How easy is it to get “on the same page”?
Communications
Will you face a lot of “Sorry, can you repeat please”?
Timezone
Will you be able to interact enough?
Attrition rate
How likely are your developers to defect?
Billing Rates
What shall one expect to pay?
Developers Pool
Do you have enough to choose from?
Other
Political Environment
Business Environment
Education Quality
Infrastructure
9. COMMUNICATIONS
EF EPI calculates a country's average adult English skill level using data from two different EF English tests completed by hundreds of thousands of adults every year.
Source: EF English Proficiency Index
EF English Proficiency Index
10. TIMEZONE
Source: http://www.worldtimebuddy.com/
When EST is
8 A.M.
6 P.M.
Brazil
9 a.m.
7 p.m.
Mexico
7 a.m.
5 p.m.
Argentina
9 a.m.
7 p.m.
Colombia
7 a.m.
5 p.m.
China
8 p.m.
6 a.m.
Philippines
8 p.m.
6 a.m.
India
5.30 p.m.
3.30 a.m.
Malaysia
8 p.m.
6 a.m.
Vietnam
7 p.m.
5 a.m.
Poland
2 p.m.
12 p.m.
Romania
3 p.m.
1 a.m.
Ukraine
3 p.m.
1 a.m.
Russia
4 p.m.
2 a.m.
Czech Republic
2 p.m.
12 p.m.
Hours to Cooperate
11. ATTRITION RATE
Hiring of wrong employee can cost your business up to $60,000
Source: Hay Group; Outsourcing Institute; NearshoreAmericas; Global Outsourcing Information Inc; The Malaysian Employers Federation (MEF), etc.
12. AVERAGE
JUNIOR
MIDDLE
SENIOR
QA
ARCHITECT
Brazil
$37
$42
$47
$36
$50
Mexico
$30
$36
$43
$35
$49
Argentina
$31
$37
$44
$35
$48
Colombia
$37
$41
$48
$36
$52
China
$18
$22
$26
$22
$26
Philippines
$19
$25
$31
$27
$39
India
$15
$19
$22
$18
$25
Malaysia
$24
$31
$38
$30
$42
Vietnam
$13
$15
$17
$15
$18
Poland
$27
$34
$42
$30
$48
Romania
$30
$38
$48
$35
$49
Ukraine
$27
$36
$41
$30
$43
Russia
$23
$29
$35
$29
$37
Czech
$32
$37
$45
$35
$47
BILLING RATES
Billing rates is an average of quotes from a minimum of 5 companies for each country
Source: AgileEngineLLC
13. AVERAGE BILLING RATE
We have obtained rates from more than 120 companiesaround the world
Source: AgileEngineLLC
14. DEVELOPERS POOL
Total developers,
thousands
USA
321
180
56
130
1,243
Brazil
25
11
4
11
57
Mexico
9
5
1
5
26
Argentina
11
6
2
4
24
Colombia
3
2
1
2
8
China
10
3
2
6
34
Philippines
8
4
1
4
30
India
178
78
7
42
548
Malaysia
4
2
1
2
13
Vietnam
4
3
1
3
16
Poland
16
7
2
3
37
Romania
9
5
1
4
26
Ukraine
12
8
3
8
37
Russia
11
6
2
6
39
Czech Republic
7
4
1
3
19
Source: LinkedIn
15. CULTURAL COMPATIBILITY
Cultural Compatibility can be defined as adaptability to multicultural approaches to support an international business environment.
Source: Gartner, Inc.
18. But we can see how countries stack up in 2 common scenarios
NO ONE SIZE FITS ALL
19. SCENARIO #1
Evaluation Criteria
Weight
Communications
3
Timezone
1
Attrition Rate
3
BillingRates
10
Developers Pool
6
Cultural Compatibility
3
Political Environment
1
Business Enviroment
4
Education Quality
3
Infrastructure
3
You have clear requirements and use waterfall or RUP process. You are budget conscious and the development is not very complex.
WATERFALL PROCESS AND COSTS MATTER MOST
Waterfall Method
22. SCENARIO #2
AGILE PROCESS AND OUTCOME MATTERS MOST
You use agile development with daily communications and want a location with highly educated engineers who stick around.
Evaluation Criteria
Weight
Communications
10
Timezone
6
Attrition Rate
9
BillingRates
3
Developers Pool
3
Cultural Compatibility
8
Political Environment
1
Business Enviroment
4
Education Quality
8
Infrastructure
6
23. AGILE PROCESS AND OUTCOME MATTERS MOST
Winners are Mexico, Poland, Czech Republic and Ukraine.
25. WANT TO HEAR MORE?
Check out agileengine.com
Or connect with Alex directly
Alex Kalinovsky, CEO
alex@agileengine.com
26. REFERENCES
1. Wall Street Journal http://online.wsj.com/article/SB1000142405297020340550457 6603073952835408.html
2. Wall Street Journal http://online.wsj.com/article/SB1000142405274870351550457 6142092863219826.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsTop
3. Sourcing Line Computer Economics http://www.statisticbrain.com/outsourcing-statistics-by-country/
4. Deloitte's 2012 Global Outsourcing and Insourcing Surveyhttp://deloitte.wsj.com/cfo/2012/09/18/outsourcing- becoming-standard-business-strategy-for-many-companies/
5. Gartner Reports http://www.gartner.com/newsroom/id/1500514
6. Gartner Says Alternative Offshore Locations for IT Services Are Emerging as Global Delivery Models Evolvehttp://www.gartner.com/newsroom/id/2177915
7. Computer Weekly http://www.computerweekly.com/blogs/outsourcing/2012/09/in dias-dominance-as-offshore-it- location-being-diluted.html
8. The Global Innovation Index 2014 –https://www.globalinnovationindex.org/content.aspx?page=GII-Home
9. English Proficiency Index http://www.ef.com/epi/
10. CBS Interactive http://www.techrepublic.com/blog/cio-insights/indian-outsourcing-why-skills-shortages-persist- despite-the-graduate-glut/
11. Outsourcing Institute
12. NearshoreAmericas
13. ABS-CBN Interactive http://www.abs-cbnnews.com/business/04/02/12/bpo-workers-opt-jobs-overseas
14. Hay Group -http://www.haygroup.com/in/press/Details.aspx?ID=37383
15. Human Resources Online -http://www.humanresourcesonline.net/news/31092
16. Malaysian Employers Federation. -http://www.mef.org.my/library/MC_MEFinthenews/SunStar120 219a.pdf