The latest Top 100 Outsourcing destinations research published by international advisory firm Tholons makes for good reading if you want to explore Eastern Europe. No fewer than sixteen different cities in the region are described in a report that covers the entire globe.
Kraków in Poland was described now as an ‘established’ location for offshore outsourcing, with the rest described as emerging, aspiring, or on the radar. Kraków and Dublin were the only European cities in the top ten on the Tholons list – with the other eight all being from Asia.
This is a great result for the CEE region in general. Tholons lists many cities across Asia and Latin America, but to find so many cities of interest to the outsourcing community all clustered together in Eastern Europe does demonstrate that a cluster of expertise is developing.
All the cities listed have the great advantage of being close to potential clients in Western Europe and being close to other great delivery centres in the CEE region. With some locations better at ITO and some better at BPO, it’s encouraging to see so many cities all in one single region.
With experts such as Tholons shining a new spotlight on Eastern Europe, it cannot be long before many other cities in the region start being recognised for their delivery capabilities too.
The analyst firm Horses for Sources is conducting their annual survey on the state of outsourcing in 2013. You can participate in the survey here and I would recommend adding your voice because this is one of the best annual summaries of what is going on in the sourcing industry.
One of the biggest changes I have observed over the past few years, and one that is accelerating at present, is a reduction of the offshoring concept – meaning that the world feels a lot smaller and that it is now normal to perform various tasks for a company in many locations.
If you go back a decade or more, an offshore IT delivery centre felt very much like it was in another location, a place where you might not expect senior executives from the client firm to be based. India is a good example – it was a low cost software production centre and executives only ever visited on business trips.
Eastern Europe is the same. There was a clear divide between where the clients were located and where the delivery centres were being developed. But this has all changed and Eastern Europe has changed much faster than locations like India.
It’s still a big journey for an American or European executive to get over to India and despite offshore delivery from India becoming common, there is still a clear divide once you arrive in the country and see a shining new software factory right next door to a slum.
It’s almost a decade now since countries like Poland and the Czech Republic entered the European Union and all these nations to the east now feel like an integral part of the continent – even more so now that the Eurozone is struggling. Ukraine grew over 5% last year and the Czech Republic almost 2% so these places to the east are really helping Europe as a whole.
We are already seeing a situation develop where Eastern Europe becomes a market for Western Europe to work with, rather than a place to locate lower-cost services. How long before it looks far more attractive to invest in the east?
New data from real estate experts Jones Lang LaSalle has indicated that Romania and Ukraine are becoming far more important players in the Central and Eastern Europe outsourcing market – challenging the more traditionally dominant Polish market.
Ukraine was highlighted in the research — the value of its IT outsourcing market hit $1bn in 2011, the Financial Times reported earlier this month, up tenfold in the last decade.
Among those major companies setting up in Ukraine, according to Kyiv Post, is Nestle, which recently opened a service centre — right across the border from Poland in Lviv.
You might ask why a real estate company is releasing data on the ITO and BPO industries and how they could be offering analysis on the growth of the hi-tech service sector. Growth in these markets needs people and offices and so one of the business areas with their finger right on the pulse of which region has the most interesting growth prospects is the commercial real estate sector.
They know where companies are investing before the companies themselves make a big noise about their own success – so markets like Ukraine are clearly now developing a momentum worth watching closely.
Poland may remain dominant in the BPO and call centre market, but this enormous growth in IT spending further east is a sign of where the smart money is heading.
For the past few US presidential elections, outsourcing offshore has been a major topic of debate. Usually the rhetoric revolves around which potential president will be tougher on offshoring than the other.
At the last election there was talk of new tax hikes for companies purchasing services from other overseas companies – but of course nothing happened, this really is just electioneering.
The USA remains the most powerful economy in the world even after the financial meltdown starting reshaping world finances. American products produced by companies such as Boeing and Microsoft sell all over the world. These products are also developed all over the world – business today is a global network of companies selling products and services across borders.
The offshore outsourcing debate during US election campaigns has always been full of hot air, playing to a domestic audience that likes to think of American companies employing only American workers, but the world economy is no longer just concerned with domestic politics.
If Dodge wants to sell cars outside the USA they need to employ people in the markets where they want to sell. If Microsoft wants to ensure their products work correctly across all the major markets of Asia, they need to employ people in those regions.
And when it comes down to IT expertise, the USA has plenty of that – it’s the birthplace of every modern giant in technology from Google to Apple, but that doesn’t mean there is not technology expertise outside the USA. If an American company wants to employ the services of an IT expert outside of the USA then that’s their choice – it’s a straight decision based on competition.
And the USA remains a powerhouse so they should welcome international competition – it will only help them to raise their own game.
Technology industry analyst HfS Research has launched a survey asking whether they should stop using the word ‘outsourcing’ in their coverage of the industry – and even whether the technology services industry should entirely stop using the word. Is it a dirty, tainted word?
Most involved in technology outsourcing have moved on from the old days of labour arbitrage or augmentation. Service providers like IBA don’t just pitch themselves as the cheapest offshore service providers; they position themselves as the experts in whatever they do. They promote specific areas of business and expertise.
The buy-side clients commissioning work (or outsourcing the work) from the service providers know that they are buying in expert services, usually services they could not perform in-house. They don’t want the cheapest provider – they want the best for their business.
But the political rhetoric has barely changed. As the US presidential election approaches, outsourcing is still considered a dirty word for politicians and a way to score a few cheap votes by patriotically insisting that they would ban it forever. But we all know that US politicians say this at every election.
These same politicians probably calculate their budgets using Microsoft Excel and broadcast information using Cisco services. They fail to see that any large technology company is already working with global resource and any company starting today with a need for some technology development will consider hiring suppliers from all over the world.
It’s not that outsourcing is about shipping work off to cheap economies; it is that the Internet has created a global marketplace. If the marketplace is global then that can create both problems and opportunities back at home, but how come the politicians rarely focus on the opportunity of small niche companies being able to reach a bigger market?
So do you agree with HfS? Is it time the industry stopped using the term outsourcing and if so, what would be better word to replace it?
The British communications regulator Ofcom just published a new analysis of telecommunications in the UK and there were some interesting results. After years of constant growth, Britons are now making fewer calls on their mobile phones, but the number of text messages sent has increased dramatically.
So the British are texting more and speaking less – is it significant?
It shows a marked change in the way people are communicating today. For instance, the survey notes that 58% of British adults send at least one text message a day, yet only 49% engage in a face-to-face conversation on a daily basis.
The argument for texting is easy – it is an asynchronous mode of communication. In short, I can send a text and not worry about disturbing the person, they can respond in their own time. A call is intrusive – it demands immediate attention. I personally ignore my telephone if I am busy with work because to endlessly be picking up the phone each time it rings would mean I never actually achieve a thing – other than answering calls from people who assume I am free to talk.
But it is significant to see that the number of calls is actually dropping and it is a worry for the mobile phone industry. They don’t make much money on texts – they are usually bundled into a contract, so voice calls are dropping and many are learning how to use their 3G connections to make a call bypassing the phone company.
But the most shocking news from this survey has nothing to do with phones at all. Can it really be true that half of British adults do not have a conversation with another person for an entire day? Maybe they should pick up the phone and call a friend…
by Irina for IBA Group
Posted on June 13, 2012
The research and analysis company, Everest Group, just published their latest Market Vista: Q1 2012 report – a quarterly focus on global outsourcing and offshoring activity and it shows that despite troubled times in many business markets, outsourcing is holding steady.
First quarter global transaction volumes reached about US$3bn in annual contract value (ACV), an increase of 11 per cent over the previous quarter. Compared to Q4 2011, the global market saw a 9 per cent increase in Business Process Outsourcing (BPO) transactions while IT Outsourcing (ITO) transaction volumes remained about the same.
83 per cent of the deals signed were new transactions showing that there is still plenty of business coming through – it is not just about companies renewing their existing outsourced contracts.
Some key points noted in the new report include:
• BFSI (banking, financial services and insurance) sector leads the market in transaction volumes with an increase of 12 percent while the MDR (manufacturing, distribution and retail) vertical saw a 9 percent increase. Transaction increases also were recorded for public sector, energy and utilities, and telecom verticals, but the healthcare vertical saw a large drop in deals signed during the quarter.
• Transaction volumes decreased in North America, held steady in the United Kingdom and increased significantly in Rest of Europe.
• Offshore activity saw 30 delivery centres established across captives and service providers in the first quarter compared to 29 in the previous quarter. With significant activity occurring in Latin America and Eastern Europe.
This latest research shows that the offshore outsourcing market remains strong, despite economic and business uncertainties in the market today. It is also worth noting that Everest see significant activity in Eastern Europe – this is a key region to watch at present.
On June 3, a joint concert of the IBA’s choir Concordia Chor and the Swedish choir Boo Cantabile was conducted at the Minsk Philharmonic Society. The concert was organized within the framework of the 3rd international festival of amateur choirs Guki Leta (Sounds of Summer), and with support from the Embassy of Sweden in Belarus and the Belarusian Union of Musical Workers.
The concert consisted of two parts. In the first part, the Swedish choir performed under the management of Helena Engardt and in the second, the IBA’s choir conducted by Galina Kazimirovskaya.
See video of Boo Cantabile
See video of Concordia Chor, solo by Grigory Zasmuzhets
See video of Concordia Chor
See video of Concordia Chor singing with Boo Cantabile
See more pictures at IBA Group’s Facebook page
It is a mere two months to the start of the London Olympic games, an event that has cost at least £9bn to stage, with a large part of that budget taken up in infrastructure costs, including technology.
But one of the most interesting technological aspects of this event is that it will be the first ever Olympics where social media is a part of the event and will help to form the opinion of a global generation.
It is true that tools like Facebook and Twitter were around for Beijing 2008, but they had not reached the ubiquity of today and tools like the iPhone were still in their infancy. Right now you can use Twitter to follow the chairman of the London 2012 Organising Committee. You can follow the athletes as they train for the games and even ask how it is going. You can ask the pundits for their predictions and get involved in planning how you are going to watch the games – whether it is the big screen in Hyde Park or down the pub.
Can you just imagine how many smart phone photographs are going to be uploaded on the 3G networks around the London Olympic stadium in the seconds and minutes following the 100m sprint final? I guess there will be at least a million photos of that single event uploaded – how many more photos and video from London can we expect during the games itself?
London is going to be special for this reason. It is going to be the first truly interactive games where the people will broadcast the event – not just a presenter in a TV studio talking to passive viewers. This will be the biggest backchannel of conversation, speculation, and debate ever witnessed – and it’s all going to be driven by London, showcasing our capital city to the world.
Although we often think of the technology around the Olympics in terms of contracts to big companies to build communications infrastructure, at this event it is going to be all about the people watching the games, rather than those on the track.
by Irina for IBA Group
Posted on May 3, 2012
On May 2, IBA Group and the Modern Art Museum of Belarus opened an exhibition entitled Hanns Baum: 18 Years in Belarus. Collages. Assemblages. The exhibition features selected works by the German artist Hanns Baum who spent 18 years in Belarus working as IBM coordinator at IBA Minsk, the largest development center of IBA Group.
See a series of video clips (in Russian and German) of the opening event and the press conference.
Valentin Kazan, IBA Vice president, introduces Hanns to journalists at the press conference.
Natalia Sharangovich, museum director, says that Hanns’ works are a reflection of Belarusian reality and introduces Sergei Levteev, IBA president, who recalls the changes that have happened at IBA since Hanns first came to Belarus.
Hanns Baum describes his works and creative process.
Zinaida Britch, a veteran of IBA, speaks about the influence that Hanns’ creative work had on IBA employees.
Hanns speaks about Minsk when working on assemblages
Hanns gives a master class
Hanns gives portraits to IBA co-workers
See more pictures of the event and Hanns’ works at IBA Gruop’s page on Facebook