IBA Group Blog

IBA Group
Mark Kobayashi-Hillary

When a company like Intel reorganises itself around mobile technologies, it is clear that something has changed (See Intel Reorganizes Mobile Business to Speed and Improve Development).

And this is no surprise. Take a look around at how IT is being consumed today and it is clear that there has been a mobile revolution. According to the latest Gartner forecast, worldwide tablet sales will reach 63.6 million units in 2011– a 261.4% increase from its 17.6 million sales in 2010. Tablet sales are expected to reach 326.3 million units by the end of 2015.

http://www.androidauthority.com/tablets-potential-corporate-use-sales-326-million-2016-33928/

So the world is organising access to computing power through tablets and smart phones much more than ever before – not through desktop PCs or even laptops.

The smartphone and tablet revolution may have started with consumers, but it is moving into the corporation. Many businesses are actively exploring how to increase productivity through the use of tablets – and they are about to become more popular than the regular PC.

Gartner estimates that the combined sales of smartphones and tablets will be 44% greater than PC sales this year, and by the end of 2014, the installed base of computing devices running mobile operating systems will surpass the total installed base of all PC systems.

That’s just two years away – more mobile devices than traditional PCs installed around the world. With such a change in hardware there is also a need for new software too and experts who really understand how to write code for tablets.

Porting old code can work, but doesn’t exploit the power of the tablet. The real winners will be the companies that realise not only what the hardware can do, but how to write new forms of code that take advantage of this new mobile business paradigm.

IBA Group
Mark Kobayashi-Hillary

In my last blog here, I outlined how a need to spread risk has led to a marked increase in companies exploring the CEE region for their IT and software development needs. But the growth in outsourced services available from the CEE region is not restricted to IT alone.

The region has highly educated people working within the service sector meaning that there are many BPO opportunities in the region. Many organisations – such as international giants like DHL – have setup very large operations serving the whole of Europe from a CEE base in a variety of different business processes.

But now there are even international lawyers exploring the region for Legal Process Outsourcing (LPO). This story in The Lawyer magazine about US law firm White & Case exploring the relative merits of Poland, Hungary, or the Czech Republic is just such an example.

White & Case already have resource in the Philippines, but are worried about their entire back office being located offshore in a single location – just like many of the IT firms that have explored a risk diversification strategy.

Every executive responsible for outsourcing needs to consider both natural disasters and political risk when locating a function offshore. Though many companies explore outsourcing as a means of reducing cost, if the offshore function fails entirely then it won’t be cost savings that are under discussion, it may be how to save your company.

It is clear that the IT sector in CEE has expanded allowing entrepreneurs to start offering many IT-enabled BPO services. All these new services help the local CEE economy to develop as well as offering a great place for companies to locate new services and to reduce their own risk.

IBA Group
Mark Kobayashi-Hillary

When the global financial crisis struck the world in 2008, many predicted that there would be a boom in offshore outsourcing. It didn’t really happen.

Why? Because at that time most companies slashed all project budgets and retrenched employees. It was a time when nobody was certain of what the future would bring and it costs money to run outsourcing projects – even if they can create longer-term savings. Nobody wanted to invest all that money in setting up in a remote location hoping for gains in the future.

We are once again in an uncertain time, but this time there is a far more mature option for sourcing in the central and eastern European (CEE) region. The setup costs for running a project in the CEE region are far lower than for a full-blown offshoring programme where work needs to be transferred to India or China.

So there is a much more credible alternative available if companies in western Europe are seeking to stabilise costs in the short-term and build a pan-European delivery model for the long-term.

The CEE region has never tried to compete head on with countries like India in terms of absolute labour cost, the advantage has always been the cultural compatibility with Europe, the expertise, and the ability to be close to the customer – it’s possible to make a day trip to a development team from any other place in Europe.

And now, with the economy looking uncertain once again in both the US and Europe it seems that the nearshoring option is looking far more attractive than the full offshore model, because much less initial investment is needed to make it happen.

We have been talking about the advantages of CEE for a long time on this blog, but it is interesting to see that the issues in the wider European economy are making it even more attractive to work with the region. Have you taken another look at how nearshoring compares recently?

IBA Group
Mark Kobayashi-Hillary

IT is changing fast and it can be hard to keep up, but companies in the IT services business know that one thing is certain, the role of the Chief Information Officer (CIO) is changing fast.

The Chief Financial Officer (CFO) is becoming more involved in technology decisions in many companies as IT moves itself more closely to the business across all industry sectors.

It’s no surprise. Think for a moment about the big difference between Business Process Outsourcing (BPO) and IT Outsourcing. With BPO, the person commissioning the work is a business leader, the head of finance, the head of HR, the head of operations… they don’t really care about the underlying technology. They just want to buy a solution that works for their business.

Now think about IT services. IT suppliers have worked with the CIO for many years – selling solutions to the technology head. Yet the role of the CIO seems to have changed during the economic slowdown. Companies require their CIO, CFO, and business leaders to work more closely than ever in ensuring that the business benefits from the decision made by all the executives.

Take a look at what IT expert Angelica Mari says in her book ‘Reboot: Leading IT in the information age’: “The CIO is quickly losing their traditional power base focused on the ownership of physical assets. The basement stuffed full of ‘kit’ is no more. In this environment, only the fittest – or smartest – will survive.”

But why has this change taken place? The past couple of years have been tough for everyone. The role of the CIO has evolved and changed because IT has become more important than ever – in all industries.

In travel, it’s probably CRM that is the most important investment right now. In government it is technology that can reduce transaction costs… In most industries, IT has become so pervasive that the companies could not operate without it. So, with IT becoming more strategic than ever, how come many industry analysts believe that the age of the CIO as technology leader is over?

IBA Group

Mark Kobayashi-Hillary

In the past three years or so, since the initial credit crunch and then global economic slowdown, outsourcing as a business strategy has taken a knock.

It’s not that there is anything wrong with it as a strategy. It’s just that outsourcing usually involves change, some change in processes and the way things are done. That needs planning and transition, so even if the future state saves money, many firms have declined to go through the process of getting there while survival has been the priority.

If you look back to the time around 2008/2009, most firms were probably focused on budget revisions, retrenching people they cannot justify keeping, and targeting business activities to those that create the most immediate return – completely focusing on getting through the recession.

But talk to most firms today and there is a more interesting and positive picture emerging. There remains the fear of a double-dip recession in countries such as the UK, and Germany is starting to struggle under the weight of supporting the Eurozone, but the major economies of Europe have been growing again – albeit slower than we used to enjoy. There is certainly a growth in business optimism and a greater desire to spend on improving company operations.

Firms are exploring how best to ride the growth when it comes, and that does involve a large amount of planning how to work with partners. The focus is now on positioning a trusted group of partners together and aiming for growth over this decade.

The biggest change in behaviour will be the desire to leverage existing assets over the next couple of years. When firms have already sunk cash into developing expertise and systems in-house, they won’t just discard that knowledge overnight.

It’s been a tough time over the past couple of years, but the new decade looks like an exciting place to be and outsourcing within Europe is going to be an important business strategy that helps us all return to growth.

On July 27, 2011, IBA Gomel, the second largest software development center of IBA Group, celebrated its 10th anniversary. Numerous guests gathered in the Belarus Railway Sports & Cultural Center to wish all the best to IBA Gomel management and employees.

Igor Khobnya, Director of IBA Gomel, opened the event, saying: “We are celebrating our anniversary with a big family. Today, they are all here – our employees, their families, our clients, and our partners. All of them together have been creating our company during these ten years.”

See video (Russian only)

Sergei Levteev, IBA Group President, went on to say: “We are all a unified team that works for the common cause to implement projects for our customers. That is why the today’s anniversary is not only a holiday for IBA Gomel. It is a holiday for all of us. I would like to congratulate you – us – on this anniversary and to wish your commander the same confidence that he had all these years and I am sure will have in the future, and to all of you, to your families health and prosperity.”

See video (Russian only)

Valentin Kazan, IBA Group Vice President, added: “In my view, to open a development center in Gomel was a great idea. It decorated the region, and made Gomel an interesting and attractive city for young people to work here, to get pleasure, to work with their families. We receive lots of positive references from customers and I see that there is a sort of competition between Gomel and Minsk teams, and Gomel never loses and in some cases performs even better than Minsk.”

See video (Russian only)

Matthias Karius, Supplier Relationship Manager at IBM Germany, recalled a project that was implemented for a Swiss customer. IBA Gomel was able to deploy a team of 50 people in a very short time. “Ten years? Looks like it was yesterday,” he said.

See video

Winners of the online Quiz (Викторина) received prizes.

Miss IBA was announced.

When you think of security, what image do you think of?
A large secure fence around the office? Or perhaps you imagine a big dog and security guard patrolling that space between the office building and fence?

But what about cyber-security?

A few days ago British newspaper, ‘The Sun’, was attacked by international hacking group Lulz Security – the front page was replaced by a notice proclaiming the death of News Corporation CEO, Rupert Murdoch.

The same hackers destroyed almost all the main government websites in Brazil last month.

And as networks and systems get more international, with service providers operating in one country, delivering to clients in another, who may be serving end users in another, how can you begin to protect the systems that are vital to your company?

Fraud, organised crime, electronic espionage, IP theft, terrorism, activism, and even warfare can call fall under the wider label of cyber-crime and all can be perpetrated without much risk if you know how to cover your online tracks. And criminals know how to cover their tracks.
If large governments and major corporations cannot withstand sustained attacks then there is a temptation to give up and feel that it is not possible to protect your company. If they can’t do it, then who can?

But companies can be protected from all but the most sustained attack through a rigorous security audit that examines every possible opportunity for a network attack.

However, companies today are really just loose networks of partners. A large company may have a supplier for the IT network, another for the phones, another for the broadband pipe, another for the local hardware security…

For any security policy to work, all these suppliers need to be considered as genuine partners. Perhaps a deal was entered into in the past as part of a cost-saving outsourcing strategy, but when you consider how important every link in the chain really is, perhaps you need to review your outsourcing relationships if you can’t already call your suppliers true partners?

IBA Group

Mark Kobayashi-Hillary

After all, what is outsourcing? It is just the purchase of a service from another company. It could be catering, it could be plumbing, or it could be IT. So, outsourcing has taken place for as long as companies have bought services from experts.

In the past decade, many in the media have declared ‘outsourcing’ itself as an industry, but I think we have moved on from this broken jargon. The time has come to stop thinking of outsourcing as something good or bad, and to just accept that all companies use outsourcing to some degree.

There are two key points to remember.

Most companies are not vertically integrated. They don’t do everything in-house. They don’t do their own payroll, or accounts. The Apple computer company may design new products in California, but a contractor assembles them in China.

Companies now sit in the middle of an ebbing and flowing supply chain that is maintained by contractors, temporary workers, internal staff, consultants… all working to steer the company in a single direction. But though the end result is the same, the way people are paid for their work is entirely different to earlier models of work where everyone is an employee of the same company and is paid according to their grade, or the time they put in.

So outsourcing is no longer the scourge of the media, the stealer of jobs. It is merely one more business strategy that allows a company to access resource in a flexible way – usually more specialised than the people on the payroll.

The concept of outsourcing is alive and a part of 21^st century business, but perhaps the word outsourcing is about to die quietly.

IBA Group

Mark Kobayashi-Hillary

Ask a computer science student in the US or Western Europe what technologies they are studying, and what they want to work with in future, and it is almost one hundred per cent certain they won’t say mainframes.

The mainframe computer – bedrock of the computing industry – has been apparently in decline since the IBM PC invaded desks with DOS, and subsequently Windows, from Microsoft. Yet, though consumers don’t use mainframes and students have no interest in them, it does not mean their use has ceased entirely.

Mainly large organisations with complex legacy systems, such as retail banking or life insurance, have extensive mainframe estates. And even where the hardware itself has remained unchanged for many years, the software continues to require updates due to product changes, new regulations, and changes in the law.

So if nobody is studying how to maintain these systems, or the programming languages used to modify them, then how can those important industries still rely on the mainframe?

There are several strong pockets of mainframe resource located around the world. Eastern Europe, and particularly the former Soviet bloc, has a deep pool of expertise in both the ongoing maintenance of these systems – and developing new software for them.

This is a classic example of how outsourcing to an offshore service provider can be about more than just the cost of service. If your legacy systems are running in COBOL on an IBM mainframe, yet the people cannot be found locally to modify the code, then outsourcing is the natural solution. Forget cost; go offshore for access to the skills you need just to keep your business running.

Mainframes are not going to die just yet. Many large organisations have systems that cannot be wound-up quickly, and as applications move further into the cloud, perhaps we are about to enter a new era of mainframes?

IBA Group

Mark Kobayashi-Hillary

I was down in Cape Town, South Africa, last week. This is a market that was very strong about five years ago – they really were the place that everyone was exploring for European call centres, but then for some reason they went off the radar.

That was partly through a combination of the government reviewing how much money they spend on promoting the region, and a dearth of really good local players that could promote their offering without government money. But regardless of what happened then, it seems they are back with a bang.

South Africa is positioning itself, once again, as a key player in the BPO market with a focus on customer service, but this time exploring new areas that are different to more traditional outsourcing – social media support and agents that are working entirely off-script, with autonomy to just do what is needed to keep the customer happy.

You might ask what this has to do with Central and Eastern Europe, the general focus of this blog?

The key target for the South Africans is directly to their north, Europe. They are on the same time zone as continental Europe, and have a strong cultural and business affinity with several western European countries. They also use English as standard for education, so kids grow up using English, but other European languages are not hard to find.

So if they re-emerge from the shadows and start winning a number of BPO and IT deals that support business processes in Western Europe, it will remind many that they are still around. Some big names, such as Amazon, have shifted German and British customer support down to South Africa only recently when this might have been expected to stay in the CEE region.

It looks like the football world cup in 2010 has woken the business community to the opportunities in South Africa and the CEE customer service players are going to have to fight a little bit harder to compete.