Russian IT Quarterly (Issue 22, January 2010)
Jan 18, 2010
Eastern Europe to Watch in 2010
The beginning of a new year is the perfect time for making a few predictions. Companies are budgeting, vendors are counting and analysts are trying to foresee the future.Following the major trend, today we'll try to make several predictions regarding the Eastern European IT outsourcing market. What will we see here in the nearest future and what will be the results of 2009?
- Mild growth. As price is not the first selling point of Russian service providers, this market is unlikely to show the same rise as Chinese and Indian providers.
However, we can expect mild growth, which is not bad at all against 2009's economic background.
- Europe's number one. Europe will remain the most significant consumer for Eastern European services providers. Indirect expenses make offshoring to more distant destinations less cost-effective for Western European countries while their continental neighbours offer high-end services at a competitive price.
However, in North America Eastern European companies don't possess these nearshore advantages and face fierce competition from outsourcing companies from India and Pacific Asia. This year these regions strengthened their positions on the American market and that will make competition really tough for any new player in the foreseeable future.
- Consolidation. We expect further mergers and acquisitions among the IT companies in Eastern Europe. Customers' concern for partners' stability and the increasing competition make small teams' prospects less certain. Even middle-sized companies, if they lack solid support from large IT holdings, do not feel secure these days, so next year we will probably see a new wave of mergers.
- Climbing the technology ladder. Striving to differentiate themselves from rivals and add value to their services, Eastern European providers are very likely to implement advanced operational methods and management practices, and apply for new quality certification to prove it. This will probably lead to a more distinct division of labour between various regions.
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