Outsourcing Is Business As Usual

by IBA Group for IBA Group
Posted on September 21, 2017

IBA Group
Mark Hillary

I was looking at the agenda for the Shared Services Outsourcing Network (SSON) Eastern European conference, which is taking place next month, and I noticed how one of the opening sessions is focused on business transformation. In particular, the session is exploring the Global Business Services model that is now so familiar to any executive familiar with outsourcing as a business strategy.

The conference looks interesting, but in my opinion the focus on outsourcing and the idea of global business services as anything other than business as usual feels a bit dated. Look at the rebranding of Professional Outsourcing magazine into Intelligent Sourcing for an example of what I mean. There is no longer anything special in deploying a global network of services or in the use of specialist suppliers. Sourcing expertise really is now just business as usual.

A decade ago things were rather different. Outsourcing was a strategy that demanded attention and endless books were published. I even wrote several of them myself. But if a major conference is devoting a 40-minute opening keynote session to talking about global business services then surely it must be important?

Forget business and think about your personal life. Have you ever questioned where Waze came from? Or Angry Birds? Or Skype? When we use software or tools in our personal life we don’t think about it as global services, yet these systems originated from Israel, Finland, and Estonia.

Tablets and phones from all over the world use software and applications from everywhere. The App store allows anyone to create tools and to make them available to a global audience. However, we rarely stop to think about this as a triumph of global services.

So why do we need to be talking about it at a business conference? If I need a partner with CRM expertise I will find the best company regardless of where they are based. Companies today are structured very differently to those of twenty, or even ten, years ago. Many people may be located in the same office, working together to the same targets, but receiving pay from different organisations depending on their expertise and role in the team.

What has really changed in the past decade is this concept of the edge of the organisation – in-house employees and contractors. Today it is far more fluid. You don’t work for the company or work for an outsourcing contractor. You all work together.

Most managers that need to lead teams already understand this. We don’t need a conference keynote to explain the obvious.

Using Automation To Protect Information On Your Network

by IBA Group for IBA Group
Posted on August 22, 2017

IBA Group
Mark Hillary

Companies across all industries face a wave of almost constant change as digital technologies redefine old industries and create new services we never even knew we needed. Think of any industry and it’s clear that digital transformation is creating a period of industrial flux that has no end in sight.

This does not help to create a secure business environment. Ideally your data and systems would be locked down and controlled, but as the recent global WannaCry attack proved, many systems are much more vulnerable than expected. In addition, many security experts are now advising that this type of chaotic information attack is something we should get used to.

So if your industry is chaotic and hackers are adopting chaotic methods of constantly attacking system vulnerabilities then how can you make sense of the chaos so your data can be protected?

This blog suggests several steps for executives worried about the threat chaos can bring to their business, but the main focus is on automating your network management and accepting that manually managing a network leaves it open to attack. Just one open port is enough for WannaCry – or similar – to get in and cause havoc inside your company.

Automated network segmentation is a reaction to the complexity of today’s enterprise networks. With many different platforms, systems, contractors, and a mix of a physical network and cloud the challenge of managing modern networks is huge. Add the potential for human error and the face pace of change and the threat is obvious.

Automating segmentation allows the system to look after itself. The network breaks into several different secure zones limiting the exposure any hacker would have. Even if a hacker gets into your business, by automatically creating these secure zones you can limit any damage.

Automation is often talked about in terms of productivity – allowing more to be done in less time, but when it comes to information security only automation of network security can really provide protection in a chaotic business environment.

How Insecure Are Your Passwords?

by IBA Group for IBA Group
Posted on August 10, 2017

IBA Group
Mark Hillary

Creating a secure environment for your information requires investment in technology and processes, but no matter how much you spend on systems it is your people that are the weakest link. Planning a secure information security strategy needs to include measures that fight social engineering and other methods used to steal data.

The most basic problem that occurs in every company is password security. According to research published in Inc magazine, each valid email address has around 130 password-protected services associated with it. That’s a huge problem if each one of us has to remember hundreds of different passwords.

The biggest problems are that people don’t change their password frequently and they often use the same password for many systems. The danger is obvious, but what should be done to make systems more secure when the real problem here is just user behaviour?

Inc has five recommendations for better password security:
1.    Update passwords regularly; apply operating system settings that force your team to regularly change passwords and also enforce a change if you suspect that a system has been breached.
2.    Never reuse passwords; it’s a common mistake, but this practice creates system vulnerabilities.
3.    Use passphrases; long phrases are much more secure than a short password and often are easier to remember – use a favourite line from a book or movie for example.
4.    Multifactor security; for sensitive systems don’t rely on a single password – use a system that creates a temporary password or uses biometrics to add a second level of security.
5.    Never store passwords in plain text; files can be copied and unencrypted files full of passwords are easy to spot. Use a secure password storage system if you really cannot remember every password you need to use.

This is good solid advice, but reality is that if each person has hundreds of passwords then they will almost certainly repeat them across systems. To really enforce information security inside a real company without ‘perfect’ people requires planning. I would advise the use of an enterprise-wide secure password management system so everyone is encouraged to use different passwords, but with the system to support them.

In addition, biometric systems are not expensive and are now very common – look at how the Apple iPhone allows a user to unlock the phone using their fingerprint. Consider protecting your most important systems, those using customer data for example, with multiple layers of security and not just a password.

A good password policy sounds simple, but enforcing good behaviour on users can be difficult. Use pragmatism and support your team so they can work securely.

IBA Group
Mark Hillary

Last year the Ponemon Institute published research analysing the cost of information security breaches – the result of a business being hacked or attacked by ransomware or even just incompetence leading to data being exposed. The average figure for a data breach was found to be over $4m – that’s right, four million dollars. Some other estimates suggest an average of over $7m. Each customer record that you lose or expose costs around $158 to clean up according to this research.

That’s serious money and therefore this is clearly now a major issue. For small businesses a multi-million dollar clean-up operation could close the business. For larger businesses the expense may in fact be far higher than this average. Information security is now essential in an environment where ransomware and hacking attacks by criminals (and even state actors) are becoming more common.

But there are still several myths around information security that cause executives to invest poorly in protecting their business. It’s an issue that affects everyone in the business and needs to be treated just as seriously as the physical security of your office premises. These are the most common issues and mistakes companies make:

1. Not dealing with human error; human error causes 33% of data breaches and 36% are just because people don’t understand the need for information security. Everyone in the company needs to understand information security, why it matters, and what protocols must be followed. This is not just an IT problem.
2. Ignorance; ignoring your legal need to follow compliance regulations over the way that data is used will lead to major fines in addition to the lost business you may suffer as a result of the data breach.
3. Trusting brands online; just because an email with a link features the logo of a trusted brand, if you did not expect to receive contact from this brand, don’t click the link. Criminals are using highly sophisticated phishing techniques to install their software and just one infected computer can give access to your network.
4. Personal devices; allowing employees to use personal devices to access work email or work systems can promote efficiency, but even password-protected phones can be hacked. If a phone is lost or stolen and it was being used to access office systems then unless the device was encrypted you now have a criminal with access to your network.
5. Papers; paper is old fashioned right? But most offices are still filled with desks covered in printed reports and spreadsheets. Detailed information is left in the open allowing any contractor with access to your office access to all that information. Even your paper recycling bin can be raided so you should really have a clean desk and shred all trash policy in place – even better discourage the printing of any documents in the office.
These sound simple, but many organisations still don’t appreciate the need for information security to the extent that they are training every staff member. Data breaches can be extremely expensive so it pays to think about your systems, your people, and your processes. Where is your business vulnerable to attack?

How WannaCry Changed The Information Security Landscape

by IBA Group for IBA Group
Posted on July 10, 2017

IBA Group
Mark Hillary

Last month one of the biggest information security conferences in the world took place in London. InfoSec attracted 13,500 information security experts for 3 days focused on the latest security issues, but one topic dominated the conference – WannaCry.

The recent WannaCry ransomware attack hit hundreds of thousands of victims in over 150 countries. Users of infected computers found their systems locked and a demand for a ransom payment if the user wants to use their computer again – hence the term ransomware.

WannaCry is possibly the largest simultaneous attack on global computer systems and is a real wake-up call for executives with a focus on information security. Companies are extracting more and more data from their customers defining payments, preferences, and future plans – more detailed information is available for hackers to steal from corporate systems. This month the AA motoring organisation in the UK has been criticised as they accidentally made the personal details of over 100,000 customers visible on their website and when they realised their error they failed to inform customers that their card details may have been made public.

But users of devices in the home are just as vulnerable to ransomware attacks. Homes are now largely wifi-enabled and have many connected devices such as laptops, phones, Kindles, and home control systems like the Amazon Echo or Google Home. Ransom attacks demanding a fee of $1000 to access your home systems again will be paid by many people because losing access to all your personal devices would be even more expensive – not only in replacement value, but because of the data we store on our devices.

The InfoSec conference delegates discussed WannaCry at length and the top tips cited for avoiding these attacks were:

1. Multilayered information security defence; in the office, ensure at least three levels of information security by managing everyday risk, compliance risk, and external risks in a coordinated way, but with different teams able to focus on each area.
2. Stay updated; at home or at work ensure that all software is up to date with automatic patching of updates. Apply a good anti-virus system and ensure it automatically updates itself. Ensure your data is not stored locally or is regularly backed up so you can recover if systems are lost.
3. Staff awareness; train all staff in the risks to the business, not just your IT team. Everyone uses IT in their function today and therefore anyone can be the access point to your business.

Data breaches and ransom attacks are now a serious threat to business and need to be treated as such. Information security no longer means running a virus check once a week, this is a complex environment that can create an existential threat to your business if you become a victim to an attack.

Brexit And Trump: Outsourcing In An Uncertain World

by IBA Group for IBA Group
Posted on June 28, 2017

IBA Group
Mark Hillary

We live in a world of political uncertainty. The British are heading for Brexit regardless of their recent general election and the American President surprises everyone on an almost daily basis with his early morning tweets. Does outsourcing continue to work as a business strategy in such an uncertain environment?

John Buyers from legal experts Osborne Clarke recently wrote a feature in Computer Weekly breaking down all the various international risks and his conclusion is that there is more stability than might be obvious at first. The analysis explore five key areas related to the present use of outsourcing as a strategy:

1. Brexit; IT spending continues to rise in the UK so there is confidence in the outsourcing market despite Brexit and the election, but it’s worth monitoring the British approach to migration. Preventing skilled labour from reaching the UK might have a negative or positive impact on how outsourcing is used – at present it is unclear.
2. Europe; The Macron victory in France appears to have halted the decline of Europe into instability that might threaten smaller economies and the viability of the Euro currency. Germany is the next big election to watch for, although there is less fear of extreme parties in Germany, compared to what happened in France.
3. Trump; The Trump dogma is focused on local jobs and big international sourcing giants will need to create more local US jobs if they want to avoid being frozen out of the American market. However, who knows how long he can last in office when so many problems are circling him after just a few months in the job.
4. India; Especially with regard to the British market, some commentators are suggesting that the tried and tested outsourcing to India model might be more popular when business with Europe becomes more expensive. Personally I doubt that any tariffs involved in EU business will outweigh the costs of doing business with India.
5. Data; Tough new data protection rules (GDPR) come into force in Europe in 2018 and this means that British companies will need to follow the rules regardless of Brexit – the earliest the UK can leave the EU is 2019. Pricing and tax of outsourcing contracts in Europe may need to take all these new procedures into account.

I certainly agree with the analysis. These five key issues could be expanded once you consider industry verticals – look at the enormous changes happening with European open banking regulations in 2018 for example – however as a summary of where outsourcing managers should be looking it is a good start. For Europeans doing any business with the UK Brexit will be a key challenge of the next two years. Companies are still investing in outsourcing partnerships so confidence remains and that’s still more important than anything the politicians say or do.

IBA Group
Mark Hillary

Use of the word outsourcing has declined in recent years. In fact, if you compare searches on Google now to five years ago then there has been a 100% decline in how often people search for the word. However, this doesn’t mean that it has gone away.

In fact, although organisations like the National Outsourcing Association and Professional Outsourcing magazine have all rebranded to focus on partnership and sourcing in their names, there is really nothing new about what companies are doing when they work together.

A recent feature in The Next Web suggested the companies – especially smaller ones – shouldn’t fear the word outsourcing for a number of important reasons:

1. Brings familiarity to the unfamiliar; bringing in large experts in specific areas, such as IT, can be reassuring for your business. You might not understand how to deliver a global Big Data solution, but they have done it for many other clients and know exactly what to do.
2. Lowers the burden of bureaucracy; buying expertise as you need it with a service contract is much easier than hiring a large number of new recruits.
3. It keeps you local; dealing with multiple countries and multiple languages in a market like Europe can be difficult, but a partner with a multilingual workforce can make your business feel very local to your customers.
4. It impacts your bottom line; this improvement to your business will impact on revenue and profits – almost certainly!
5. Access to talent; accessing the best people where are when they are needed is possibly the single most important reason to use outsourcing as a strategy.
6. Staying lean; you can focus your own team on core competencies and buy in the additional expertise you need – important for staying focused on what is important for your business.

It’s true that many organisations have started dropping the term outsourcing in favour or partnership and there is a reason for this. Many new outsourcing contracts really are much more about corporate partnership, rather than just a client and supplier. There is still a client, but they really need their expert supplier. The supplier needs clients, but now they are working much closer to clients and creating innovative solutions now just agreeing a specification on day one and delivering the same thing forever.

I like this exploration of outsourcing in The Next Web. It’s a title that usually explores innovation and start-up culture so to see that they accept outsourcing as a part of the start-up environment and managerial toolkit is interesting and reassuring.

IBA Group
Mark Hillary

I saw some research published on IT Pro Portal that compared the pros and cons of British companies outsourcing IT processes to India and Eastern Europe. As might be expected, the arguments are generally around the cost of doing business in each location and the available skills, but it was interesting to see some references to the AT Kearney 2016 Global Location Index.

This research focuses in detail on the best locations, focusing on cities and clusters of cities rather than just comparing one country with another. At a broad level the Eastern Europe destinations do extremely well when compared to all other locations globally. Five out of the top twenty best locations globally for IT services are located in Eastern Europe.

In my opinion this underlines an important point. Many journalists writing these comparison stories focus on cost, particularly when they explore the cost of doing business in Asia. However, as the AT Kearney research demonstrates there are many more reasons that these locations in Europe excel in IT services – to reduce everything to cost alone is far too simplistic.

At present I can’t see an update to the AT Kearney research for 2017, but I’m sure it’s coming soon. When I look at the data for 2016 though I can see three stories emerging:

1.    Companies are using outsourcing as a strategic tool specifically to access skills, not to reduce costs.
2.    Companies are using outsourcing and partnership with IT experts because they need to explore automation and industrial developments such as Robotic Process Automation (RPA).
3.    Companies are finding that they need to offer cloud-based services that are charged as they are used and this requires extensive IT expertise to deliver successfully.

The India vs Europe comparisons don’t generally appreciate that the way business is delivered has changed dramatically in the past decade. Working with IT experts today is essential if companies are going to be able to deliver successful digital transformation programmes – skills and expertise are driving outsourcing programmes today.

IBA Group
Mark Hillary

Although outsourcing as a business term has generally been replaced by strategic partnership, there can be no denying that it is being used more and more by European companies. Recent research from the UK shows that companies are exploring IT outsourcing as a business strategy more than they have been for at least five years.

In fact, the latest data on UK spending on IT outsourcing shows that British companies spent £1.74bn ($2.26bn) in the first quarter of this year. 68% of this spending was on launching new IT projects.

The strong data is encouraging, especially with such a large proportion of new project launches. The Brexit process in the UK has caused uncertainty for any businesses that need to interact with European partners, but this data shows that at present there is still a clear appetite for technology improvement.

If Business Process Outsourcing and Customer Experience outsourcing is added into the picture then there is an even stronger message of growth coming from the UK. Q1 featured £2.73bn ($3.55bn) of overall spending on outsourcing of IT and services enabled by IT. That’s growth of 13% on the previous year demonstrating that businesses in the UK are investing heavily in IT and the services that IT supports.

The UK general election will take place in June, but it is generally assumed by most analysts that the incumbent Conservative party will continue to lead with their focus on delivering Brexit by 2019.

Although British politics appears to be confusing at present, with an election and the process of leaving the European Union all filling the headlines, it cannot be denied that executives are investing in technology. This implies that there is some confidence in the UK economy over the next few years and with growth at around the 13% mark that looks good for IT specialist partners all over Europe.

How Are The Predicted Tech Trends of 2017 Working Out?

by IBA Group for IBA Group
Posted on May 3, 2017

IBA Group
Mark Hillary

We are already in Q2 of the year so is it possible to observe how any of the predicted technology trends for 2017 are playing out? At the start of the year Gartner predicted a global IT spend of £3.5 trillion so there is a lot at stake.

Gartner predicted a move away from hardware spending as more companies source services from cloud-based solutions. This is bad news for the companies building servers, but great news for companies trying to quickly get new solutions up and running. This is one predicted trend that is observable in almost every IT project I see. Nobody is interested in managing their own infrastructure today, which creates a great opportunity for service companies to offer cloud solutions.

Business Insider published their own long list of predictions, from which I think that three are particularly worth mentioning:

  • Internet of Things; long talked about as a smart fridge, but now it is clear that all electronic objects can connect online and be more useful. I talked at a conference last month about how auto manufacturers are planning to create cars that can self-diagnose problems – an audience member told me that Chevrolet is already doing this. It’s happening right now.
  • Virtual Reality; I have long talked about VR as a tech that just needs people to have access to it at home. Now this is finally happening. In the past few months the new Sony Playstation and Microsoft Xbox have both been released with support for VR. Tens of millions of homes will be VR-ready by the end of this year.
  • Blockchain; it’s clear that Facebook has enjoyed some success over the past year with their Messenger cash transfer service, but it’s clear to me that they will take it further and create a global currency that can be used on Facebook. The Chinese WeChat service is already used for payments so I believe Facebook will need to make a quantum leap beyond just connecting a credit card to your account and this will be by taking the experience of BitCoin and making it easy to use virtual currencies. Blockchain will underpin the experience, but the user base of over 1bn people will ensure that when Facebook seriously gets into finance it will rock the industry.

What is particularly interesting is that several of these technologies have lurked around for years without much adoption – look at Augmented Reality for a great example. However there is a wave of enthusiasm for many of these nascent technologies now because companies are finding real business solutions and consumers are demanding better services.

Which of the predicted technology trends do you think will become the biggest later this year?

5 Tips For Increased Outsourcing in Europe

by IBA Group for IBA Group
Posted on April 26, 2017

IBA Group
Mark Hillary

The Netherlands Foreign Ministry funds an organisation called The Centre for the Promotion of Imports from Developing Countries – or CBI for the short name. CBI facilitates trade between Europe and developing countries as a way of stimulating those economies. It’s the old argument of ‘trade not aid’, but now as government policy.

CBI recently published research on the outsourcing market in Europe and how attractive it is for companies to work within at present. It’s interesting because they are focusing mainly on demand – are more companies likely to outsourcing inside Europe and if so, how would they do this?

They identified five key factors. This is advice to supplier companies who want to win business from customers inside Europe. They are quite insightful comments and especially when this is a government research project – not private sector companies already involved in outsourcing.

1.    Innovation; I was surprised to see this in a government report, however they are correct that the client and supplier relationship has moved on. Companies are not looking to just outsource business-as-usual, they want a partner who knows their processes inside-out and can offer new ideas and ways of improving those processes.
2.    Focus on Verticals; don’t claim you can offer solutions to any business. Choose the verticals you know and focus on marketing in these areas. Service providers are now expected to know far more about the business than ever before – you need to be suggesting better ways your client could be working.
3.    Open Standards; use very open publicly available delivery methods such as the app store and cloud-based systems. This makes it extremely easy for your clients to find solutions and install them – without the need for complex installation and maintenance.
4.    Smaller customers; it is not only big companies looking to outsource today. Actively targeting smaller companies with automated solutions can be a great way to tap into new business.
5.    Output based pricing; don’t charge by the number of employees you put on a project. Charge the client based on outcomes. Their success is your success.

CBI noted that nearshoring is a much more popular strategy than outsourcing across a long distance. There is a lot of opportunity for companies to engage more in Europe and this advice really demonstrates some good ideas about how to improve the client and supplier relationship. You can read the entire report here.

What Are The Biggest Trends in Outsourcing Today?

by IBA Group for IBA Group
Posted on March 28, 2017

IBA Group
Mark Hillary

A recent Raconteur report explored some of the key trends driving outsourcing today. The six key trends identified are:

1. BPM not BPO; Business Process Management means taking over entire services for clients and working as partners, not like a supplier.
2. New Frontiers; many new markets are offering services, particularly in African countries that have not engaged much with global IT in the past.
3. Local Government; a wave of global austerity is forcing governments globally to explore outsourcing.
4. Changing Contracts; the long-term 20-year deals are over.
5. Cyber Security; Companies need more help than ever protecting their information and their supply chain.
6. Transformation; more than ever, outsourcing is being used to completely change companies and to help them explore new business models.

These are good observations, although it is not mentioned that both IT outsourcing and Business Process Outsourcing have been dramatically changed by innovations such as cloud based services and the app store culture. Delivering IT services today is far closer to offering products to customers than it used to be – bespoke development still exists, but is far less common.

However, the problem I really have with the six trends is that the report appears to give them equal weight. They are all listed with an appearance of the same importance, whereas I believe that the first point is entirely reshaping the outsourcing market.

Many technology services are so complex today that large companies will almost certainly not have expertise in-house. Think about complex Big Data analysis as a good example. Designing and building the database systems is hard enough, but to make sense of it you need data scientists. Most companies don’t have any of these skills just sitting around waiting to be used.

The Customer Service marketplace is another good example. Customer Service used to mean managing a contact centre. It was quite a dull and repetitive process and could easily be managed in-house or could be outsourced to a service provider that could provide the service at a lower cost. Now there is an enormous amount of technology involved in managing customer relationships – ERP for supply chains, CRM for managing interactions, Big Data for analysing trends and social interactions. Managing customer relationships now is far too complex for almost any company – other than the biggest – to handle without going to an expert.

Outsourcing is becoming an essential strategy for this reason. Companies need to hire expertise. These clients really need the expertise of the supplier to help build their strategy. The days of lining up three similar suppliers and then asking which one will offer a service at the lowest price are largely over. Supplier relationships now are far closer to partnerships where both companies want the business to succeed.

We all know this from our personal life. You know that there might be a cheaper plumber or a cheaper car insurance company out there, but you also know that if you go for the cheapest then the service will not be good. This thought process has now entered into the enterprise outsourcing space. In fact, the term outsourcing no longer really reflects the partnership nature of these corporate relationships today.

Perhaps it’s time to say that outsourcing is dead, but partnership is alive and well?

Can We Really Rely 100% On The Cloud?

by IBA Group for IBA Group
Posted on March 16, 2017

IBA Group
Mark Hillary

Companies across the world will recall February 28th 2017 as a bad day. It was a day when their patience was tested beyond anything most executives can remember in years. It was the day that the Amazon Cloud went down.

The Amazon Web Services (AWS) Simple Storage Service (S3) service now accounts for an enormous amount of Internet traffic. There are many major players in Cloud services, such as Microsoft, Google, and IBM, but AWS is the biggest. In fact, AWS is so big that their cloud revenue is about twice the total of those three other companies.

Forrester Research predicts that the cloud marketplace will be worth $236bn by 2020 – that’s up from around $95bn in 2016. So it is clear that this is an important market. It’s growing fast and it has changed the nature of IT services and IT outsourcing. Companies are now keen to buy end to end services that can be delivered over the cloud, rather than requiring infrastructure and software on site.

However, the AWS service failure in February shows that some companies have become complacent about the cloud. It was a simple human error by an engineer at AWS that took the service down for over 4 hours and affected millions of people. Why were so many companies taken by surprise and why did nobody have a backup plan?

This feature in Database magazine asks all these questions and suggests a few pointers for executives who want to mitigate against a similar disaster in future.

In general, cloud services are more reliable than setting up infrastructure inside your own office. Companies like Amazon invest enormous amounts to ensure that network and power outages are avoided. However, as we have seen, problems can happen and if your service needs to be available to customers 100% of the time, how can you offer your own guarantee when you can never be 100% sure that your own infrastructure providers will deliver?

In my opinion, the three best tips from the Database feature are:

1. Monitor services yourself – don’t just rely on your supplier. You might notice service issues before the cloud supplier ever tells you something is wrong.
2. Have an alternative provider ready – it’s expensive to duplicate, but if you really cannot afford any outage then mirroring may be required.
3. Communicate – make sure that you tell customers you have a problem so they can come back later or otherwise delay their interaction with you. By saying nothing, customers will expect a normal level of service.

IT services has been transformed by cloud based services and because it generally improves the reliability of services executives have often been blinded into believing these services can always be relied on. Mostly they can, but it’s worth remembering that even the biggest and best planned networks can fail. What would that mean for your business?

IBA Group
Mark Hillary

If there is one thing that global business hates, it’s uncertainty and with all the political changes of the past half year there is plenty to go around. President Donald Trump is making endless policy pronouncements on Twitter, the UK plan for Brexit appears to be a process that will take years to resolve, and with several major European elections this year we may see even more populist leaders emerging.

One thing for sure is that the global IT and IT outsourcing business involves the movement of skilled people to places where contracts are operating and the movement of projects to people. For years there has been a constant flow of both. Sometimes the work itself can flow from a client to supplier in a remote location. Sometimes the IT supplier needs to send teams to the client. There has been a two-way flow of skills and work for many years that has created a global industry with several international clusters of expertise.

The approach President Trump is taking in the USA may give an indication of how many countries want to operate in future – with a drastically reduced inflow of people, no matter how skilled they are or how required those skills are.

In the first instance this appears to be a big concern for the Indian IT companies who account for over 70% of all H-1B visas in the US. The H-1B visa is used to allow highly skilled workers to temporarily work legally in the US. 85,000 visas are available each year and 230,000 applications are made. At present they are randomly allocated, as all valid applications are from highly skilled people anyway. Trump plans to make it much harder for companies to get the H-1B, although the exact criteria change remains undefined.

Similar fears exist for companies operating in the United Kingdom. It is clear that the free movement of EU nationals will end as Brexit is agreed, but it remains unclear how EU nationals already living in the UK will be treated. Will they be allowed to stay in return for the right of UK nationals living inside the EU to stay there? At present nobody knows and it is this uncertainty that is bothering many inside industries such as IT, that are used to a steady flow of skills across borders.

There could well be an upside for companies that specialise in nearshore IT services, if the Indian IT players find that they are going to start being seen as too far away from their customers, but for now the future remains uncertain. What is clear is that some of the largest companies in the world depend on sourcing IT expertise globally, yet some of the biggest governments in the world don’t appear to be listening to the companies that create the jobs.

The Biggest Trends in IT Outsourcing in 2017

by IBA Group for IBA Group
Posted on February 13, 2017

IBA Group
Mark Hillary

CIO magazine is usually a good place to explore future trends that will affect the global IT industry and right at the end of 2016 they published a good list of issues affecting IT outsourcing. We are already a month or so into 2017, but it’s still worth taking a look at this list of ten key trends that anyone in the IT outsourcing area needs to be aware of.

From the ten, the three that really stood out for me were:

1.    Security; more than ever, security is a major concern. Companies can fail because of security breaches and with links between companies under scrutiny this requires a strategy that explores people, processes, and technology.
2.    Automation; more services are being delivered automatically and more customers will expect to see IT costs reduced with an increased delivery because of automation.
3.    Cloud; it’s about far more than just raw power and storage. Entire critical services are now cloud-based and it’s becoming unusual for companies to want anything other than a cloud-based solution now.

The CIO list also suggested that IT suppliers will pivot and start offering additional services, such as consulting, but I would suggest that this is just part of a wider change taking place.

We are moving on from a traditional client and supplier type outsourcing arrangement to partnership or co-sourcing. I know that suppliers have talked for years about partnership, but I mean genuine partnership where the contract between companies is not strictly about what can be delivered, it includes provisions for how to innovate and how to make the deliveries better. If the two companies start working together, rather than one just selling a service to the other, then we are no longer talking about pivoting services, there is the potential to build new products and services together – as if the two companies are functioning as one.

That’s going to be one of the biggest changes in IT outsourcing in 2017 and I’ll comment more on how this might work in one of my next blogs.

Aleš Hojka: We can offer a solution for any company

by IBA Group for IBA Group
Posted on January 31, 2017

Aleš HojkaIn an interview to the TTG magazine, Aleš Hojka, CEO of IBA CZ and IBA Slovakia, speaks about solutions and services that any company can benefit from.
When I look at your business card, IBA strongly resembles IBM, doesn’t it?
You are right. Originally, IBA was founded in Minsk in 1993 as a joint venture with IBM. The brand and logos of the company are deliberately similar and as IBA was growing, it shifted to a direction different from IBM. New branches emerged, the first one was created in the Czech Republic, and the product portfolio has changed considerably. Although today IBM does not own any of the IBA Group branches, a very close cooperation continues.
For IBM, we implement both internal projects, for example one of the most remarkable is the Learning Portal, as well as other within our core expertise in portals and mainframe. In cooperation with IBM, we work for the end customers and bring them the best of both companies. Anyway, now we operate as two separate entities in the Czech Republic being even competitors to some extent.
Worldwide, IBA has over 2,500 employees with about 120 in the Czech Republic and still expanding. We have our own development centers in Prague, Brno, and Ostrava. The entire IBA Group is headquartered in Prague and now has offices in 11 countries, including the United States and South Africa, with IBA Slovakia among the youngest.
So what is the crucial area of your activity?
We dominate in portals, document management, mobile applications, and more. Most often, we use Java and .NET, though not avoiding enterprise and open source solutions, but mainly listen to our customers and assist them while providing deployment and maintenance of our solutions in their environment.
Whom do you mostly supply the solutions and what can we expect from them?
Our customers are large financial institutions, telecom operators, and government institutions, as well as manufacturers and distribution companies. Primarily due to our own development, we can offer advanced solutions for a company of any size.
For example, for Česká pojišťovna, we have developed a part of a mobile application that helps people deal quicker with car accidents. To be more specific, it finds the nearest service station, facilitates provision of all data that the insurance company may need, and etc. For T-Mobile, we have created an intelligent contact form with a prompter that allows for self-servicing in most cases. As soon as the user has finished typing a request, an answer is suggested, as well as other information that might be of interest. With our solution, T-Mobile receives roughly by 30% of emails less, which is a huge number and great cost savings on their call center operations. For the Generali insurance company, we provided a secure online consolidation of insurance with suggestions throughout the process. For Moneta, we created a fully responsive loyalty portal Bene +. The content adapts to the screen size of a device, either a mobile, tablet or desktop, with no need of development for each platform separately.
And what is your activity in the tourism sector? Do you have any customers in this area?
Not yet, though indirectly, we actually operate there as well, for example, within the projects for the regional authorities or the National Heritage Institute. But as I say, we are capable of meeting the requirements of any customer. Document management is used almost everywhere. Let’s say, a solution intended for invoice workflow covers the whole lifecycle from scanning a document to the data entry via processing, approval only after payment, and archiving, with all the stages automated and transparent.
Or the so-called Big Data, which is the processing of large volumes of data and keeping track of customer behavior. When a user logs into a social network where there’s a lot of personal data and then visits some other website, these tools recognize the user and offer him or her an advertisement of related products, for example, on news portals. For travel agencies and rental companies, we can offer the integration of their systems into a large retrieval system like Booking.com or TripAdvisor. Identity Management may also be of great necessity, thus providing security system and preventing unauthorized user access.
This system facilitates the work of administrators and also makes personal client data safe from leakage.
For the customers engaged in tourism, we can offer the services where we are truly the market leaders. From simpler websites and intranets with e.g. a review of attendance through complex client loyalty portals where each user sees different data, to the solutions like an anti-corruption subportal that we have created for the Department of Defense and that guarantees absolute anonymity. A portal may also serve as a planner of human resources, which could be useful especially for companies with a large or frequently changing number of permanent or temporary employees.
Integration with social networks may also be of interest. Our expertise on how to use the information that people make available on a variety of networks for targeted advertising may be useful everywhere, including the tourist sector.

 

How Is Nearshoring Changing?

by IBA Group for IBA Group
Posted on January 27, 2017

IBA Group
Mark Hillary

The British technology magazine Computer Weekly recently published analysis by Professor Ilan Oshri of Loughborough university on how the European nearshoring market is adjusting to a more mature environment. In particular how different markets are aiming to distinguish themselves from the pack.

I wrote about this research from Loughborough university last month, but the constant push to regionalisation rather than globalisation – as I mentioned in my last blog – made me find this research again. In the context of the political activity in Europe and the USA, this is worth visiting again as it is taking on increased importance.

Anyone who has attended a nearshoring or outsourcing conference in Europe knows how the various regions promote themselves. PowerPoint slides are loaded full of statistics demonstrating government support, a steady flow of graduates, great local companies, and a low cost of doing business. In most cases though, the consistently positive messages from one presentation could be used by another country without anyone noticing that the message had changed – because the message in each pitch is largely the same.

Professor Oshri suggests that we should take it as read on the basic measure. Most European countries have good airports and a supply of graduates, so anyone considering nearshoring will be looking at other factors – the companies and trade bodies in those regions should appeal to these factors:

– Higher Value; what higher value can working in your region offer? What sets your companies or country apart? Are there particular industries you excel in or skills that are hard to find?

– Ability to partner; suppliers today need to move on from the traditional client-supplier relationship and become a part of the value chain. They need to be true partners, not just hired help.

– Innovation; many companies today are looking to their suppliers for advice on innovation. Innovating throughout the supply chain is becoming much more common – are you able to innovate for your clients?

In short, Professor Oshri is suggesting that when companies look to nearshoring regions they are looking for much more than just a low cost place to do business. If you are still marketing your region as low cost with a great airport then you might be losing business just because you are not looking ahead to the type of relationship companies really want.

In an environment where managers are thinking in detail about how to ensure processes are closer to home, this is more important than ever.

Try thinking of how your location is different. What differentiates you from the others? Focus on this, even if it is a niche difference. It will make all the difference in a nearshoring market that is growing fast as companies focus more on developing regional partners rather than long distance offshoring.

Regionalisation Beats Globalisation After Election Surprises

by IBA Group for IBA Group
Posted on January 16, 2017

IBA Group
Mark Hillary

There was an interesting analysis of the trend towards regionalisation published in business magazine Forbes just before the recent holiday season. It explored how the Brexit vote in the UK and the election of Donald Trump as the US president might change business behaviour.

Politics went through something of a shock in 2016 and 2017 may hold further surprises in Europe with elections in the Netherlands, France, Norway, the Czech Republic, and Germany all coming soon…

But what does Forbes mean about a change in business attitudes and how does it affect those in the IT business?

The answer lies in the growing nationalism seen in the USA and many European countries. There is a growing desire to show that jobs are being created and managed close to home, or at least closer to home than before.

In European technology circles this is likely to manifest itself with less trust in technology suppliers from Asia – particularly China and India. Many of these companies are highly professional leaders in their industry, but as consumers start becoming more wary of strategies such as outsourcing and offshoring, it is likely that managers buying IT services will look closer to home. As Forbes suggests, the trend will be towards European regionalisation, not globalisation.

It is unlikely that markets such as the UK or Germany will create enough new technology professionals to ensure all work can be performed locally – and the cost would be prohibitive for most organisations anyway – but these consumer attitudes will favour technology companies in Eastern Europe.

The Central and Eastern Europe (CEE) region has long marketed itself as a European alternative to China and India. Allowing European companies to work with partners that are close enough for a day trip to be possible. Now they will have an additional advantage, the growing political and social unrest about long distance offshoring.

It’s good news for European technology companies as Europe remains close – organisations in Europe buy 69% of their goods from other European companies. The USA may be a more complex scenario as President-elect Trump has already talked about scaling back drastically on the H1B visa that most foreign IT professionals use when working in the US.

Whatever happens with the politicians, the direction of travel is clearly towards nearshoring as a preferable solution. The era of the world being completely flat appears to be over. Welcome to an era of regionalisation.

How IT Leaders Can Learn From Big Data Industry Changes

by IBA Group for IBA Group
Posted on December 19, 2016

IBA Group
Mark Hillary

The Big Data market has transformed how most IT services are bought and sold. Often the customer is a business leader, rather than the CIO, and services are already available, rather than needing to be designed from the ground up.

IT leaders often look at other companies to see what they are doing, it’s usually known as best practice, but what if the entire market is in a state of flux? Some IT companies are now delivering radically different solutions to others. Innovations like the app store concept and cloud based solutions are changing the way that IT services are delivered globally, so how can changes in the Big Data market change how the entire IT industry behaves?

Techrepublic magazine recently outlined some important changes in how IT leaders think about their marketplace. Think of these 5 different changes as examples of what is changing and how it can influence the behaviour of IT leaders:

1.    Off the shelf analytic solutions like Watson from IBM have been customised to be used across many different industry verticals. It’s the same system, but modified for different environments and it can therefore offer immediate results. Everyone is looking for a rapid return on investment today.
2.    Commodity hardware offers a great platform for storage if you are going to keep your data and analytics system internal, rather than in the cloud.
3.    More companies are relying on their suppliers for expertise and innovation today. These are true partnerships now, not just outsourcing arrangements where the cheapest supplier gets the project.
4.    Analytics reporting systems like SAS are still important because they have been tested and developed over so many years, but also because the users are really familiar with the way these systems work. Familiarity is important.
5.    Real time processing systems are changing the way that physical infrastructure is designed and deployed. Look at SAP HANA for an example of how systems using memory in new ways are now feeding back into the design of the physical servers and databases.

What do you think about the lessons from Big Data? Have you seen other ways in which IT is more generally changing because of the way that Big Data is influencing IT strategy? Please leave a comment here.

How is The European Nearshoring Market Changing?

by IBA Group for IBA Group
Posted on December 12, 2016

IBA Group
Mark Hillary

Is there a new world of nearshoring emerging in Europe? A recent feature by Ilan Oshri of Loughborough University in Computer Weekly has suggested that the market is changing fast, in particular as a reaction to every country sounding the same when making their sales pitch.

We have all been to those conferences where one country representative is talking about the advantages of their region over others, but when several regions do the same type of talk they do all sound the same. We have great people, we have universities, we have great companies. The same check-box of advantages is always ticked for every presentation about outsourcing to a particular region – so what is changing?

First, there is a big wave of repatriation taking place. Projects that were outsourced to far off locations are coming much closer to home so nearshoring is becoming a much more important strategy for European companies.

Second, a wider array of services can be delivered by suppliers today and this is especially true when the supplier is relatively close to the customer, so the range of services offered through nearshoring deals is becoming more diverse.

Third, companies are increasing their expectation on suppliers. A supplier is no longer just the lowest cost way to get a job done. Many suppliers are the expert in their field and are delivering a service that the client simply could not perform internally anyway. The clients are now expecting suppliers to offer ideas and new innovations. Nobody is talking about innovation as a nice to have function these days, it is becoming an expectation of nearshoring that the supplier can come up with ideas on how to do business better.

Professor Oshri raises some very interesting points in his article. He believes that nearshoring locations still attempting to compete on labour price are thinking with a very short term view of the world. The ability to offer expertise and advice to clients will become the single biggest advantage and this may also require clusters of expertise to develop. He cites some examples of regions where competing firms are operating in the same physical location, so even if it does not sound logical, it does mean that for each specialist activity there are areas where clients can go and confidently find the expertise they need.

I believe that we are seeing a new type of nearshoring emerging and all three of the points raised by the professor are playing out across Europe today. The final point is the most important though. Clients used to be so powerful that they could pick and choose and drop suppliers at will. Now the suppliers have some very detailed knowledge that the clients cannot manage without. Real partnerships are developing and that will lead to genuine innovation.

What do you think about the ongoing development of nearshoring in Europe? Please leave a comment here.

IBA Group Wins Second Place at IT Spartakiada 2016

by IBA Group for IBA Group
Posted on November 30, 2016

On November 27, the organizers of the 13th sport competition among IT companies IT Spartakiada 2016 announced the results of this year’s tournament. IBA Group won the second place, following their successful performance in 2015.

Sixteen teams participated in the competition this year. For the first time in its history, IT Spartakiada was held in two stages, with the tournament starting in spring and finishing in autumn. In its spring stage, the participants competed in laser tag, swimming, poker, and indoor football. In autumn, the teams clashed in karting, kicker, bowling, table tennis, volleyball, and basketball.

IBA won the tournaments in kicker and bowling and occupied the second place in laser tag, poker, and swimming. The karting, table tennis, and indoor football teams finished fourth, while the basketball team ended the competition at the fifth place. This allowed IBA to finish at the second place in the overall standings.

Winners of IT Spartakiada are determined by the minimal sum of points scored by teams in their top seven sports. EPAM was the winner of this year’s competition, while ISsoft won the bronze.

Congratulations to our colleagues! We are proud of their success and wish them many more great achievements in the future.

IBA Group Wins Second Place at IT Spartakiada 2016

The IT Customer Is Changing Fast, But Are They Happy?

by IBA Group for IBA Group
Posted on November 15, 2016

IBA Group
Mark Hillary

I have read several studies recently that explore the strengthening connection between how companies use technology and how satisfied their customers are. Traditionally the CIO in a large organisation might be focused on processes, supply chain technology or managing systems used by employees – this is changing fast because of three important trends:

1. Consumer tech; look at the mobile system consumers are used to using today. They can compare prices, talk to friends globally, check customer reviews, and do all this while in your store or on your website. It’s not possible to charge more than the competition today because customers will see it immediately.

2. Tech platforms; the major systems applied inside companies used to be custom-built. Armies of analysts would design the workflow and another army of developers would build the system. Now it’s far more common to buy a system that can be deployed in the cloud and paid for only when it is used. This means that business divisions inside companies are buying major IT systems and deploying them possibly without even involving the CIO or IT team.

3. Blending customer responsibilities; all those clearly defined departments like sales, marketing, customer service, advertising, or PR, forget it. They need to start working together because customers have redefined how they interact with organisations and the companies need to reform and catch up – customer service IS now marketing.

There is a connection here. As the various research studies suggest, companies need to review how they are using technology, and in particular how this improves their connection to customers. Whether you are involved in IT department tasks or CIO-level decisions, or you are part of the business function within an organisation, there is a revolution taking place in the way that customers interact with your business and it is being driven by the technology being used both inside your company and by the customers.

More IT Expertise In Eastern Europe Becoming Visible Globally

by IBA Group for IBA Group
Posted on November 8, 2016

IBA Group
Mark Hillary

Global freelancing platforms, like UpWork and JobRack, are becoming an increasingly important source of IT talent. These sites have been really popular with freelancers in many countries in Asia for some years now. It’s become quite normal to hire a contractor in India or Bangladesh to perform defined jobs, such as setting up a WordPress server, but JobRack has recently noticed something interesting about the people on their site.

Many of the new experts arriving on the site are from Eastern Europe. This is demonstrating that there is not only a large amount of technical expertise in Eastern Europe, but also that these people are available for short contracts.

On the surface this may not seem important at all – you can find IT expertise all over the world – however I think that we are observing some big changes in the way that IT services are deployed and managed and this growth in the availability of expertise in Eastern Europe is just one indication of that change. Summarised, I think there are three big changes taking place:

1. Big IT Brands Focused on Customisation and Configuration; rather than trying to deliver enormous bespoke software systems, the larger IT players are becoming experts at bolting together various Big Data or CRM platforms to create entire systems for customers based on existing systems or toolkits.
2. App platform is global; software companies releasing apps can go global instantly. There is no real focus on where a product was developed as the app store is global and customers rarely ask where a product was developed.
3. Global talent pool; as the JobRack numbers suggest, it is becoming easier to recruit globally for short or long-term projects and areas that are full of technical expertise, such as Eastern Europe, are included in this.

The JobRack data indicating a growth in Eastern Europe technology expertise is interesting, but is just one component of a wider picture in how technology services are being delivered today. It’s clear that Eastern Europe is becoming more highly regarded as a leading area for IT development projects – large and ongoing or small and temporary.

IBA Group
Mark Hillary

One of the manufacturing myths common in the UK is that nobody builds anything any longer – it’s popular to suggest that the UK used to manufacture products such as cars, but today that business has all vanished. However the numbers make the situation look rather different. Last year around 1.6m cars were manufactured in the UK, which was the highest figure for a decade.

But 2016 brought the Brexit vote and some potential changes to the auto manufacturing industry in the UK. The recruitment company DHR has suggested that auto manufacturers are shifting high-end work such as research and development over to Eastern Europe. Their data is supported by the news that companies such as Jaguar, Audi, and Renault have all recently invested in Eastern European expansion plans.

However, I believe there is more at play here than just the Brexit vote changing how cars are designed and manufactured. What we think of today as a car is changing faster than ever and the research function is about more than developing the next generation of sound system. The entire auto industry is being redefined around technology and the car makers that get this right will win a substantial market share.

There are three areas where I think technological research is redefining the entire auto industry and this summarises why the locations where the R&D take place will be at the heart of planning the future of this industry.

1. Electric vehicles; Tesla has shown that electric vehicles can be popular, but the price is still out of reach for regular consumers. As the regular brands invest more in R&D and battery design we will see an enormous change in this market.
2. Internet of things; cars just becoming a part of your home network will be normal. This will allow cars to self-diagnose problems and talk to the manufacturer without the owner being involved in addition to synchronising to your home – perhaps something as simple as playing the last song you had on in the house when you start the vehicle.
3. Self driving cars; we have seen that it is mainly tech companies that seem to be progressing in this space, but if the mainstream auto brands want to define the future then they need to also be investing in this space.

All this shows that the future of the car industry looks more like the technology industry with integration into networks, the Internet of Things, new battery technologies, and the ability to function without human interaction. There will be a strong crossover between the IT business and the auto business in the near future and it looks like a lot of this work will be taking place in Eastern Europe.

IBA Group
Mark Hillary

Outsourcing has never been a business strategy with much prestige. Often seen as a way of handing over business problems to a partner or slashing costs, it is a strategy that has always had an image problem.

In recent years this has improved. As many processes have become far too complex for companies to manage in house there has been a rebalancing and outsourcing is more often seen as necessary – it’s just one business calling in the experts in the same way that you would call in an electrician to rewire your entire house rather than attempting it alone.

But the role of the service provider is changing and although it might sound a bit like the tail wagging the dog, there is a likelihood that the only way many companies will change quickly enough to survive in the present environment will be if they can trust and work with their suppliers in a new way.

In a recent blog Phil Fersht of HfS Research published some research from his company that outlines how suppliers and clients see their roles in the future. Barely half of all clients are looking to their suppliers for any value in their relationship beyond the business support that is contracted.

But this is highly likely to be a mistake. Outsourcing to expert suppliers and only ever using them for the business processes you have contracted means that you miss out on their vision of how your industry is changing. Look at how fast fintech is changing financial services. If an app is released offering a financial service more easily and at a lower price then that can fundamentally change how the industry operates.

Doing business today is not just about doing what you did yesterday a little cheaper or faster. It is easier than ever for competition to be created and new companies often just tear up the rule book and deliver services in an entirely new way. The big difference is that new companies are usually designed around the needs of the customer from day one. They are able to offer better services at a lower price – this is going to affect many industries and yet a new approach to outsourcing could help mitigate the risk of it happening to your business.

As the HfS research suggests, there is a role for outsourcing to support and enable disruptive business models. Incumbent companies have the advantage of brand recognition and many years of working with customers. New disruptive players can change the market, but if the incumbent innovates first then they have distinct advantages in being able to offer better services with a large existing customer base.

But it needs a new approach to outsourcing. Suppliers need to be considered genuine business partners and trusted to have vision and ideas – the ability to combine innovation with technical expertise. If suppliers are only ever treated as a cost centre then this approach will be lost and many large companies will find that the app-based startups eat their lunch.

IBA Group
Mark Hillary

Europe is in a state of flux at present. British people recently decided that they should leave the European Union – now known as Brexit – and the latest book from Nobel prize-winning economist Joseph Stiglitz suggests that the Euro currency will tear the rest of the union apart.

In this uncertain environment, does the old idea of European nearshoring still work? There are many countries within the EU block and part of Western Europe that now have very high unemployment and low labour costs – look at Greece, Portugal, and Spain for examples. Is it still valid to think of Eastern Europe as a supplier of technology skills to the rest of Europe?

I was thinking about some of these uncertainties when I read an article on the GSA Sourcing Focus site. The article explores some of the issues around Brexit and how it might affect outsourcing relationships.

The three main issues mentioned by Sourcing Focus are:

1.    The cheap pound; it’s no longer so cheap to buy services from outside the UK so with the economic advantage eroded will more UK companies buy services locally or look beyond Europe for better value?
2.    Legal situation – data transfers; The UK enjoys the protection of the entire EU regarding company law and international agreements protecting issues such as data privacy across borders. How will this change if the country has to legislate for every possible situation individually?
3.    GDP collapse; if the UK becomes a much smaller economy as many economists suggest then how will this affect the relationship between UK companies and suppliers across Europe? It doesn’t look good.

The fears raised by Sourcing Focus are valid. It’s clear that the UK market in international services could change dramatically in the next few years, but I think that it is premature to start defining issues just yet. The UK government has not even triggered Article 50 of the Lisbon Treaty yet. This would indicate the formal request to leave the EU and begins a two-year process of negotiating how to leave.

At present the situation is that the UK population voted to leave the EU and the government has said that they will follow the wish of the people, however they are now engaged in a process of negotiation before any formal negotiation begins. Nobody really knows what will happen to the UK at present.

The issue for UK companies at present is this uncertainty. Any UK company bidding for business internationally cannot predict what kind of tariffs or taxes might be applied to their services in a few years and therefore they are at a disadvantage. This could lead to a reduction in international services being delivered from the UK and therefore it could be advantageous for Eastern Europe, but if UK customers suffer in this environment and they are already working with suppliers in the CEE region then this would not be such a great situation.

The real problem now is the uncertainty. The UK government should take action as quickly as possible so that however this story plays out, at least there is more certainty about how the UK will interact with the rest of Europe in future.

IBA Group
Irina Kiptikova

On October 6, the Global Sourcing Association (GSA), formerly known as the European Outsourcing Association (EOA), held the Global Sourcing Leadership Summit and announced the winners of the 2016 EOA Awards. IBA Group was selected the winner in the category Award for Corporate Social Responsibility (CSR). The news is really exciting. The project that earned the award is really special.

IBA Institute, a member of IBA Group, trained 120 disabled people in system administration. Entitled Promotion of IT in Belarus among People with Disabilities, the award-winning project was the first IT education project for disabled people in Belarus.

As many people with disabilities were unable to attend in-class trainings, IBA Group conducted distance training. The students could see the teacher’s desktop, ask questions, make presentations, and prepare lab works on network behavior in Cisco Packet Tracer.

Following the training, IBA Group organized a contest among the graduates of the course to attract employers’ attention to the newly educated system administrators. The idea was to show that people with disabilities deserve praise and well-paid jobs.

The contestants were to troubleshoot network connection problems and to get access to web resources within two hours. The winner solved the task in one hour. Alexander Makarchuk, a completely paralyzed resident of Borisov, left behind the runner-up by 40 minutes. From an outsider’s viewpoint, it looked like he was singing canticles: e-e-e and the curser jumps up, a-a-a and it moves to the right…Technically speaking, Alexander manages the cursor using the software Vocal Joystick that ‘memorizes’ the entered words.

It was the first project in Belarus to socialize people with disabilities through IT education. As a result of the project, a community of learners with an immersive environment was created. Six project graduates, including the contest winner were offered IT jobs!

students

In addition to CSR, IBA Group submitted Belarus in the category Outsourcing Destination of the Year. Although Egypt was selected the winner, it is a big boost for Belarus to be shortlisted in this important competition.

As for the Global Sourcing Leadership Summit, it was held in Sophia, Bulgaria. Rosen Plevneliev, President of Bulgaria, opened the summit. After Bulgaria was selected the Outsourcing Destination of the Year in 2015, a letter of the Bulgarian President came to Kerry Hallard, NOA and EOA CEO. He invited the association to organize the 2016 summit and awards in Sofia. It goes without saying the invitation was accepted.

Bulgaria boasts the same competitive advantages as Belarus or Czech Republic. President Plevneliev mentioned qualified resources and political stability, calling Bulgaria “an island of stability” in Europe. People of different religions and politics co-exist in the country.

Kerry, now the CEO of GSA, announced that after 29 years the NOA brand stopped its existence and the NOA was transformed to the Global Sourcing Association (GSA). The new association signed cooperation agreements with Russian and Chinese outsourcing associations and adopted its Global Sourcing Standard.

The most popular discussion topics at the summit were gender equality, robotic process automation (RPA), digital technologies, and the meaning of Brexit for the European sourcing market.

See the full list of 2016 GSA European Award Winners

GSA Shortlists Belarus For Best Outsourcing Location Award

by IBA Group for IBA Group
Posted on October 6, 2016

IBA Group
Mark Hillary

I blogged several encouraging reports from my visit to Belarus a couple of months ago including an interview with Valery Tsepkalo from the Minsk Hi-Tech Park (HTP) and Sergei Levteev, the IBA Group Chairman, however there is now some exciting news that verifies what these experts have been saying for years – Belarus has been noticed and recognised by the Global Sourcing Association (GSA), previously known as the European Outsourcing Association (EOA).

GSA Awards

Specifically, Belarus has been shortlisted as one of the best outsourcing destinations in Europe and IBA Group is shortlisted for the best European Corporate Social Responsibility programme.

The final decision will be announced at the awards ceremony in Bulgaria tonight. Whatever happens at the awards ceremony it’s a big boost for Belarus to be noticed in two important awards categories in this way. The best location and the company that is most responsible – all important, but given the information supplied by Valery and Sergei in those earlier interviews I’m sure that Belarus has a serious chance of winning the best location in Europe category.

Belarus has big local companies offering complete end-to-end solutions and expertise in systems integration, but the local startup scene is also extremely strong too. Companies like Viber and Wargaming are innovative and are defining the markets where they operate. Many services are now distributed via the app store for Apple and Android users and therefore the country of origin is noticed less than before – local players can quickly become global in this environment.

Government tax breaks and services such as the HTP are showing that even smaller nations can make a big impact in the global technology marketplace. Shortlisting Belarus as the best place in Europe for IT outsourcing is just one more step towards a more general recognition that this is a great place for running technology projects – good luck to everyone in the Global Leagership Summit & Awards tonight!

New Reality: Technology Trends for Belarus to Apply

by IBA Group for IBA Group
Posted on October 5, 2016

IBA Group
Daria Kovalevskaya

On September 30 and October 1, the IPM Business School organized a technology conference in Minsk, Belarus. The conference titled A New Reality: Challenges for Belarus explored the modern trends in technology and how they are applied in the world and, particularly, in Belarus.

The first part of the conference was dedicated to crowdfunding. Speakers highlighted the advantages of crowd economy not only for small businesses and startups but for bigger companies and enterprises as well.

Crowdfunding allows for shaping the entire industries according to what consumers want to see and buy. If they want to read a book by a particular author, see a play with a particular cast of actors, or even buy a chewable ice maker, it’s up to them now to finance it. At the same time, campaign creators are able to validate their ideas (to see if the world is actually interested in what they have to offer) and create relationship with potential clients.

Indiegogo Co-Founder Slava Rubin Talks About Crowdfunding

At the second part of the conference, speakers presented the Internet of Things, drones, and chat bots. The most exciting part was the presentation of Smart Cities, a project by Philips, which uses recent advances in communication and data analysis to make big cities more livable and sustainable. Small sensors and devices work together to collect information that can be used later to save energy and help citizens feel safer.

Advantages of drones and chat bots were also mentioned. The potential of drones cannot be underestimated, as the drone market has recently hit $127 billion. While mostly used in the entertainment area (photography and video shooting), drones operate in construction, agriculture, transport, and security. They can cover areas that are either unreachable or unsafe for humans and substantially reduce the human factor risks. The only stepping stumbling block for drones is the government and rigid drone registration policies.

Chat bots are presented as alternatives to mobile apps. Similar to AI assistants like Siri or Allo, bots provide instant information. The main advantages of bots are multiplatform usage (opposed to mobile apps, bots don’t require different coding for each operating system) and low prices for their development.

The last trend discussed at the conference was Blockchain, a technology that allows for making and verifying transactions instantaneously without a central authority. A great example of Mycella, a company created by singer Imogene Heap, shows benefits of using the blockchain technology. Artists could release their music themselves, gaining control over their earnings and additional information about their songs.

Countries like Belarus may easily adapt to these technologies if they accept them and introduce changes to their institutes.  Crowdfunding is already a triumph here, with the biggest Belarusian platform, Ulej, funding over 40% of successful campaigns since its launch in 2015.

New reality has already made its way into the modern life. Customers, creators, and mechanisms of interaction between them are changing, and those who will be the first to embrace these changes will gain the biggest benefit.

IBA Invites Children to City of Professions

by IBA Group for IBA Group
Posted on September 28, 2016

On September 25, IBA organized an interactive family festival entitled City of Professions for its employees and their children to celebrate the beginning of the new school year. The festival was held at the Dream Land amusement park in Minsk.

Young visitors had a chance to learn about different professions. At the entrance to the festival, a special Job Center offered children various career opportunities.

The city comprised 15 educational stations where each child could try out a profession of his or her choice. Future workers received their employment record books, a bag of delicious treats, and ibucks – a special currency created for the participants of the festival. Children could exchange their ibucks for hot chocolate and rides.

Everything was ‘real’ in the City of Professions. To start working, youngsters had to wear special uniform and listen to safety instructions. Future firefighters trained in fire extinguishing using hoses, doctors learned to perform closed-chest massage and artificial respiration, pastry chefs baked muffins and cooked pancakes, artists painted their masterpieces, and detectives had to solve crimes. For their work children received ibucks.

Alongside with employees and their kids, IBA Group also invited children from the Social Pedagogical Center of Minsk’s Soviet District, the 410th daycare center, the 2nd gymnasium of Novopolotsk, and home for senior and disabled people of Logoisk.

Last year, IBA held another festival to celebrate Knowledge Day – Eco City.

To see pictures from City of Professions 2016, visit our Facebook page.

city of professions 2016

Why Using Cell Phones at Work Can Be a Good Thing

by IBA Group for IBA Group
Posted on September 21, 2016

The recent Innovation issue of PULSE Magazine, a bi-monthly e-zine created by and for IAOP’s members, published an article by Sergei Zhmako, IBA USA General Manager. The publication titled Why Using Cell Phones at Work Can Be a Good Thing focuses on social and mobile tools and their place in the corporate strategy of an enterprise.

According to the article, mobile and social technologies, being a strong trend in the consumer market, have become a top priority for most enterprises. With two billion people across the globe using social media and half of the web traffic coming from mobile devices, organizations actively employ these technologies in their work environment.

Mobile and social technologies enable easier communication and collaboration between employees and provide an instant access to business information and learning materials.

Despite bringing exciting opportunities, social and mobile technologies may also bring a number of challenges, as transition to them requires additional skills and effort.  The article gives ten recommendations to consider in a mobile or social engagement. Here are top three of them:

1. Engage Users Early – companies must strive to engage users at the early stages of the project lifestyle, including prototyping and receiving quick feedback from focus groups.

2. Consider Added Features – new features, such as a GPS location sensor, camera, or mike, could be added to solution if such need arises.

3. Change Your Culture and Make It Fun with Games – gamification can contribute to easier transition to enterprise mobility.

You can read the full article here.

CEE Trends For An Emerging Europe

by IBA Group for IBA Group
Posted on September 13, 2016

IBA Group
Mark Hillary

An interesting video series on the website of Emerging Europe magazine recently explored some of the new trends and opportunities for IT and outsourcing in the Central and Eastern Europe (CEE) region.

The 8-part video series looks at various aspects of outsourcing in Eastern Europe, but I found it particularly interesting to see that there was a strong focus on emerging locations and current Business Process Outsourcing (BPO) trends in the CEE region.

Many new locations are developing as the larger CEE cities find that their BPO industry matures. With strong competition between service providers it makes sense to explore smaller cities, especially those where universities provide a strong flow of talented people ready to work in the BPO industry.

BPO itself is also undergoing a change of attitude. Previously BPO was associated only with contact centres and many graduates are no longer interested in those jobs, however the more complex BPO being undertaken in CEE today comprises a wide range of business services – this is much more attractive than contact centres alone.

Complex industries, like financial services, being supported by suppliers in the CEE region are finding that they are developing new solutions and systems rather than taking existing processes from another region and copying them offshore. This is because many entire industries are changing fast and sourcing services from the CEE region helps them to perform in a more agile and competitive way.

This also creates a learning culture in the CEE companies where people are not just expected to copy processes from western Europe and the client companies. They are expected to anticipate how industries are shifting and to then meet the new needs of their clients – a much bigger and more exciting challenge.

The huge mega-deal of the past is less common today thanks to smaller teams of best-of-breed suppliers that can work together on deals.

The entire CEE area and the type of services being provided is dramatically evolving. I recommended watching the entire video series from Emerging Europe to get some great advice on what’s really happening.

IBA Group Employees Successfully Run Minsk Half Marathon

by IBA Group for IBA Group
Posted on September 6, 2016

On September 4, IBA Group participated in Minsk Half Marathon 2016, an event dedicated to the Minsk City Day. Over 20 thousand people, both professional and amateur runners, took part in the marathon.

This year, the marathon gathered participants from 42 countries, including Russia, Ukraine, Costa Rica, Kenya, and Japan.

IBA Group didn’t remain indifferent to the event and joined Minsk Half Marathon. Fifteen employees of the company participated in the marathon, choosing one of three available distances (5.5km, 10.55km, and 21,097km) and successfully completing them. Congratulations to our colleagues on their achievements!

Healthy lifestyle is encouraged at IBA Group. The purpose-built fitness center offers classes in aerobics, pilates, and yoga. Employees can visit a gym, play mini-football, basketball, volleyball, and tennis.  Rooms for billiards and table tennis are also available in the fitness center.

IBA Group frequently participates in various sport events, including IT Spartakiada, IT Karting, and other championships. The company organizes Tourist Rally, an annual two-day camping trip for employees, which includes sport activities and teambuilding.

In 2015, IBA Group took the first place at the 12th IT Spartakiada sport competition, winning gold medals in karting and bowling, as well as bronze medals in kicker and volleyball. The table tennis and basketball teams finished fourth and fifth respectively.

IBA Group Employees Successfully Run Minsk Half Marathon

Click here to see more photos from Minsk Half Marathon.

The Changing Nature of Global Outsourcing

by IBA Group for IBA Group
Posted on August 25, 2016

IBA Group
Mark Hillary

The traditional drivers or outsourcing are factors such as availability of talent, flexibility of a supplier to provide expertise, and a reduced operating cost, but a recent feature in CIO magazine showed that the situation around the world is changing. Many regions are seeing unusual changes that are sometimes beneficial and sometimes problematic.

IBA is focused on the Central and Eastern Europe region (CEE) and there are changes taking place in many of these countries that are not usually picked up by commentators who merely talk about rates being lower than western Europe. The conflict in Ukraine is a good example.

All organisations want to operate in a stable political environment. Armed conflict is not going to help any business function smoothly and it is interesting to observe how the CEE neighbours of Ukraine have all benefited from the conflict. Many IT and BPO companies with operations in Ukraine have shifted their teams west into neighbouring countries and many individuals with skills have just moved, seeking work nearby. In some cases (like Lithuania) the local government has made it easier for foreigners with IT skills to come and find a job.

These unusual changes in outsourcing attractiveness are repeated in several other places around the world. Brazil and Colombia have both seen currency depreciation over the past year that makes their services at least 20% cheaper than a year before – for companies using US dollars.

Even inside the US there are changes that are not reported so often. The government offers many incentives for companies that hire military veterans and as the USA winds down various overseas operations there are many veterans starting service companies and using their veteran status to win contracts with companies that want to hire locally, but also see that they get tax benefits in doing so.

What’s interesting about all these cases is that they show how complex the outsourcing decision process is becoming. This is no longer about selecting a nation or individual company, many other factors are in play and can affect how a corporate relationship works.

Mark Hillary

I recently visited Minsk in Belarus as a guest of IBA Group. They were opening a major new facility in the city to expand their capacity and to boost their cloud capabilities globally. The new IBA Group facility is located inside the Belarus Hi-Tech Park (HTP), a venture partially funded by both the public and private sector to help boost the wider IT industry in Belarus.

I met up with the HTP director Valery Tsepkalo to ask him about the technology industry in Belarus and how the park fits into the wider development of an industry that is rapidly changing and expanding. Initially I asked about the park itself and what can be found at the HTP in Minsk. He explained: “We have been operating for a decade now, but it’s not just IT park facilities, it is also a wider concept of the companies and the park – like a representation of the entire IT industry. It’s like a club. Belarus is quite a small country and Minsk has most of the national IT industry so this park pulls everyone together and offers some physical infrastructure. We have the administration of the park here and our offices, but also a business incubator, education centre, and the individual company offices.”

After we talked, Valery gave me a tour of the incubator. It was an impressive area where the HTP offers office infrastructure to startups at a very low rate to help get them started and potentially become full-price HTP customers.

“We have 153 companies in the HTP with 24,000 software engineers. All of the companies are independent and all are privately owned, the government has no stake in them. We [the HTP] are an agency of the government and have an agreement with the member companies so they can take advantage of a special tax regime. We do demand an annual audit and an update on the companies every three months so our members are very open with their information. It’s important for potential clients to see this level of transparency in the IT industry. Big companies like Epam or IBA have their own international reputation, but being here helps the smaller member companies to build trust,” Valery explained.

So the HTP offers physical infrastructure, but also offers a chance for many people in the same industry to work in close proximity, creating opportunities for networking and sharing information on business trends. I asked Valery if the HTP is involved in the global promotion of the technology industry. He said: “Yes, but we don’t usually promote the HTP alone, we create delegations with our companies so other business owners can see the companies that are using the HTP. Often we work with chambers of commerce or our embassies internationally to create events that promote cooperation. When you are one part of the wider industry it gives everyone more clout than just promoting the HTP alone.”

This is an interesting point because many IT associations find it hard to get companies to cooperate when promoting their national industry overseas. Naturally every individual company is pitching for business, so the harmony they need to promote a region together can be hard to find.

Valery explained that when they talk to overseas customers there is a requirement to sell both the capabilities of the IT companies and Belarus itself: “We need to sell both the country and company. When we had quite strained relations with the US and Europe we asked clients to come and visit. Even if their view is not favourable based on the media then they quickly found that the reality is very different. It’s a normal country with no real difference to Greece or Slovakia. Clients that come here see a normal European country with hard working people. The best marketing is just to do a good job for your customers.”

The political image problem is something that cannot be ignored in Belarus. The nation has famously been called “the last dictatorship in Europe” by many commentators in the European and American media, so how can the companies in Belarus deal with such a negative media portrayal? I asked Valery if the general problem of how Belarus is perceived has been reduced now there are several important companies from Belarus working internationally. He said: “It’s one reason yes, but politically most western countries realise that this political situation is better than our neighbours, like Ukraine. At the end of the day whatever you like or dislike about the way that countries are run, at least if you have people there that you can negotiate with and you know that there will be good outcomes then it is better [for everyone]. In our part of the world the legal system is not quite like it is in the UK; it was basically just criminal law after the Soviet Union ended, but we are well on the way to improving this.”

It’s true that the IT market in Belarus is growing fast. Valery described some of the latest statistics from the HTP: “[In recent years] we were growing 30-40% a year, but it’s a bit less at present with about 20% growth in revenue. The latest figure was about $800m (USD) which is 46 times the entire IT industry here in 2005. So after just nine years of activity we have made an enormous difference – we plan to pass the $1bn figure this year.” He added: “The park is growing at about 3,000 new people each year and this has been a consistent level of growth for about the past five years. It’s a really good growth rate because [the industry analyst] Gartner suggests that most IT markets are growing 3,4, or 5% and in the last year the global IT industry actually declined by about 1.5%, yet here we are still growing at over 20%.”

Traditionally the IT outsourcing market in Central and Eastern Europe was all about serving companies in Western Europe, such as the UK and Germany, and being able to offer lower prices, but with a highly-skilled workforce. However the entire IT and IT services market is changing at present. I asked Valery what changes he is seeing from Belarus: “The service companies are moving to offer sophisticated complete business solutions. One of our companies is building the front office for eCommerce companies because many traditional retailers need to fight experts like Amazon – if you can’t match this kind of online service then you are lost.” He added: “The startup culture is an interesting trend too, like Viber [phone app similar to Whatsapp] for example or World of Tanks [battle game produced by Wargaming], one of the most popular games in the world right now. These companies start up and build a product rather than working for clients. Many companies like IBA Group have created start-up garages so their own employees can test out new ideas too. I remember when some of these products launched and they were very local, but many of these products have gone completely global.”

I asked if the app store business model had changed how IT companies in Belarus are delivering their services. Naturally the Apple and Android app stores have created an opportunity for IT companies to develop services anywhere and immediately have a global distribution platform available.

Valery said: “The app store model has definitely changed the market and allowed some of these companies to go global quickly. Even ten years ago I couldn’t expect results like this. When Wargaming entered the HTP they had about 30 developers and now they have over 2000. But now they are not just located here, they have teams all over the world.”

The HTP in Minsk, Belarus is a mix of trade association with physical infrastructure and some government support, but it is clearly supporting a young, vibrant, and fast growing industry in Belarus. What is really interesting though is that companies you might just think of as ‘European’, like Wargaming or Viber, have their origins in Belarus. It’s certainly a market that’s still growing because there is a local culture that is supportive of seeing every ship rise on the same tide.

Big Data Is Becoming Big Marketing

by IBA Group for IBA Group
Posted on August 15, 2016

IBA Group
Mark Hillary

It’s fascinating to see how quickly different technologies can move from the world of the technology expert to the mainstream. Think back ten years and it was quite rare to be using the mobile Internet. Some people were struggling along with a very slow connection and an old Nokia handset, but it really wasn’t until the iPhone came out in 2007 that it started becoming easy to use the Internet when on the move.

More recently look at how everyone suddenly understands Augmented Reality (AR) because of the Pokémon Go game. AR has been around for years as a way of overlaying information onto live images, but it has never caught on in a mainstream way until now.

I think we are about to see a similar shift in the way that Big Data is accepted in the enterprise environment too, because it is moving on from just being important to the technologists.

Companies are finding that their customer journey is changing dramatically. This is the route that customers use to find out about products and then buy them. Instead of seeing adverts or marketing materials and then making a purchase, there is a much more complex two-way information flow that can be spread across many channels.

Many organisations are finding that they need to blend all their customer-facing activities together so they can be coordinated. This means that the Public Relations, Advertising, Marketing, Sales, and Customer Service teams all need to be working together because all of them are involved in the customer journey to some degree.

Making sense of all this change requires data and analysis. Smart companies are finding that they can develop better strategies by analysing patterns of customer behaviour, but this requires the analysis of very large data sets. Suddenly Big Data is moving into the world of the marketing team and becoming a valuable tool.

So for any company to succeed in this more complex customer environment, more knowledge about customers is essential and I believe that strong data analysis skills will be needed more than ever. Watch out for this as Big Data skills are going to become a mainstream part of organisational strategy in the very near future.

Enterprise IT Is Changing Fast

by IBA Group for IBA Group
Posted on August 3, 2016

IBA Group
Mark Hillary

I saw an interesting Tech Target blog on the storage requirements associated with Big Data projects recently. It’s interesting to see just how many technology concepts are now either blurring together or becoming interdependent.

Consider this as an example. A shipping company installs tracking devices on every vehicle and container they use – it might be tens of thousands of individual items that can now be tracked and monitored and more effectively moved into position. Clearly that increased efficiency is great for the company, but what does it mean in terms of additional IT infrastructure?

First there is a need for an IoT strategy – the Internet of Things – where all these individual items can be tagged and monitored in some way. Either they can independently broadcast their location or they can be monitored using devices that pass in close proximity to them.

So the sheer amount of information that is being captured requires a Big Data strategy because instead of just having an inventory of items, now you need to model the items and their location in real-time. Your database has to become a reflection of the business.

Then a data analysis strategy is required because you need to build models that can maximise the efficiency of the data model and improve on what humans can do manually. As the machines learn the optimum processes, much of the system will be able to run automatically.

But underpinning all of this will be a storage strategy because the amount of data that is created, stored, and manipulated will be huge compared to earlier inventory-based systems. In some cases the data capture will appear to be extraneous – capturing the movement around a port of a single container might not by itself add a lot of value to your business, but when aggregated with the location and movement of every container and analysed, efficiencies can be created.

And this leads back to the use of a cloud strategy to ensure that all these systems always have the storage and computing power available whenever needed.

It’s becoming hard to consider any of these strategies as distinct from each other because the way that IT projects work today has moved far from the world of PC-based applications. Enterprise systems are getting bigger and better, but they need more consideration and strategic planning to succeed.

IBA Gomel Celebrates 15 Years

by IBA Group for IBA Group
Posted on July 28, 2016

IBA Group
Irina Kiptikova

On July 27, IBA Gomel, the second largest software development center of IBA Group celebrated its 15th anniversary.

The entire team and numerous guests gathered at the Locomotive Stadium in Gomel, the second biggest city of Belarus.

Igor Khobnya, IBA Gomel Director; Valentin Kazan, member of the IBA Group Board; Valery Tsepkalo, Director of Belarus’ High-Tech Park, Matthias Karius, Supplier Relationship Manager at IBM, and representatives of the Gomel city administration, universities, customers, and partners appeared before the audience.

They recalled the days when they began working with IBA Gomel, linking the company’s history with the history of the global IT industry, and thanked the company for excellent work.

The party was really cool! We all had fun greeting those who were honored for hard and brilliant work, listening to the hearty welcomes from partners and guests, watching the magic show, dancing, and simply enjoying the atmosphere.

Congratulations to IBA Gomel and its director Igor Khobnya! The company is truly happy to have Igor as an unchallenged leader and the IBA Gomel team as one of the best centers of excellence.

About IBA Gomel

IBA Gomel was registered as a legal entity on July 26, 2001, while the official opening was held on December 17, 2001. The founders were members of IBA Group, namely IBA Minsk, IBA IT GmbH, and IBA Intelligent Systems. The goal was to take advantage of highly-qualified human resources of Gomel Region with its long IT traditions and universities providing education in IT specialties. The first IBA Gomel’s project dealt with SAP development for IBM. Implemented in cooperation with IBA Minsk, the project involved ten programmers. Today, the team amounts to 350 IT specialists who work on different projects for local and international companies.

IMG_2161

Click here to see more photos from the party.

IBA Group
Mark Hillary

Earlier this year the management consulting firm AT Kearney released their latest IT Global Services Location Index. This research shows where they believe are the best locations for IT outsourcing globally.

The first thing that is interesting about the report is that a quarter of the top 20 countries are all located in Central or Eastern Europe (CEE). It’s clear that locations such as India or China will offer lower cost IT services, but based on a wider variety of factors the CEE region performs extremely well.

The CEE countries featured in the AT Kearney top 20 are Poland, Bulgaria, Romania, Latvia, and Russia. All these countries, except Latvia, improved their position in the top 20 year on year so there is not just a large proportion of CEE countries in the top 20, there is a trend towards this region becoming more attractive too.

But there is also a big shift taking place in IT outsourcing. The AT Kearney research also describes how Business Processing As A Service (BPaaS) is poised to reshape how outsourcing works. Outsourcing is not just about a client commissioning IT work from a supplier in another country – the entire process of buying IT systems is changing.

This is an important point and echoes what we have seen in the consumer market. Think about how you use software on your own computer or phone. Either there is an easy to install app available from the app store or you can use a service within a browser. There is no installation or configuration required to use your own personal technology systems and enterprises are mirroring this behaviour.

The cloud was originally popular with companies that wanted flexible access to computing power or storage, but it has matured into a strategy that allows systems to be centrally installed and configured and accessed remotely. The client can then only pay for the time they are using the system, blending IT systems with BPaaS.

The real winners in IT outsourcing in future will not necessarily be the companies in the lowest cost location or with the most technically gifted employees, it will be the companies that can plan for cloud-based services with pricing plans that make sense for companies that do not want to pay up front for technology services.

In Conversation With Sergei Levteev, IBA Group Chairman

by IBA Group for IBA Group
Posted on June 28, 2016

IBA Group
Mark Hillary

During my recent visit to Minsk to see the launch of the new IBA Group campus I managed to find some time in the diary of Sergei Levteev, the IBA Group Chairman. We sat and talked about some of the issues facing technology companies and in particular how strategies such as nearshoring are changing.

I first asked Sergei about the way that IBA, and similar companies, present themselves to their prospective clients. Do they need to focus on the qualities of the company itself or sell the location where they are based?

He said: “There is a combination because if we are selling IBA then we also need to sell development expertise in Belarus, but we invite people to come and see what we do in Belarus and we are happy to introduce them to reference clients.”

He added that reputation and longevity is also important: “A key point is stability. We have been delivering from here for over 20 years. People are worried about various situations, such as politics, but it has been very stable here. Customers think about cost and quality, but they also want stability.”

The reality is that both the location of a technology supplier and the experience of the company are both equally important, as Sergei summarises: “Companies have to be located somewhere so we always invite clients to come and see where and how we work. It’s important to talk about both – give references for the company and show that the country is stable too.”

I was interested in any recent changes to the nearshoring market and as IBA has a particular expertise customising tools such as SAP, I asked how this market has changed. Sergei explained: “Customers always wanted to change products and this needed a lot of programming and changes. Now they often realise that they are buying a good product used by hundreds of thousands of customers so they change their business processes to fit the software. In this case we work more on a consulting basis, to help tune processes to the software product, rather than reprogramming it.”

This is an interesting observation because the customers have led it. As tools like SAP have improved, most customers no longer ask for development work to change the system, they ask companies like IBA to help them change their processes to fit the software system.

Sergei added: “If you compare the situation today to 5 to 7 years ago then it’s true, the customer would say that we know best and you should just do what we ask – the customer is always right. Today there is less programming and more of a focus on the vertical expertise, such as banking or retail.”

But in addition to this change in the nearshoring marketplace there is also the move towards business solutions being delivered via the cloud, rather than customers paying for entire bespoke solutions to be built. How has this trend affected IBA? Sergei said: “The customer no longer wants to pay for the future. They will not pay for infrastructure years in advance. They want to check if you can deliver a business solution and then agree on a monthly payment. They are not asking for a completely new system to be designed and built, they want to subscribe to an existing business service.”

He added: “This is one of the reasons why we invested in our new data centre. It’s not that we just want to have a data centre, it’s because we want to offer services to customers and for them to feel confident that they can pay for a service just like they pay for electricity now. IBM was talking about Software as a Service (SaaS) more than 10 years ago, but it was mostly theory then – now it’s a reality.”

So there are various trends reshaping the nearshoring market, such as the cloud, pay as you go business solutions, and a move to consulting rather than just software development, but has the nearshoring and offshoring debated changed completely?

Not so much. Sergei explained: “Software development is still a focus area for IBA Group. As for sourcing, the customer is always looking for the right mix of on-site, nearshore and offshore IT. We are working on a project in Lithuania and that’s really nearshore because people can come and go easily, but nearshore is more expensive than a completely offshore project. In the past few years we have seen many companies exploring in-sourcing, where they create new internal technology teams, but this is rarely economical and I think that it is a temporary idea.”

He summarised the big change ahead for the rest of 2016: “The cloud is still quite new, but it will be the future. The mentality of the customer has to change to use more cloud-based services. In Western Europe the cloud is mature, but here in Minsk there are many managers who would like to keep the technology in their office. However, I believe it will be the main form of IT service delivery in the next 2-3 years.”

The nearshoring market used to be focused on lower cost software development, but this is changing in several ways. Customers are looking for solutions they can rent more than building their own systems and when they do decide to buy a software solution, they are using IT companies for business process alignment, rather than making changes to the software.

All these changes suggest that cloud-based services really are the future for IT service providers, but not all of them will be able to build off-the-shelf solutions they can rent. Those who cannot win this new type of business will face ever-decreasing rates, as the customers look more to service quality without a big financial risk, rather than slashing the cost of developing new systems.

Click here to see images and videos from my visit to IBA Group in Minsk this month…