Look Overseas for IT Services
Outsourcing IT services from other countries is no longer just for the adventurous. The practice is established. And new suppliers are appearing in new territories.
Mar 17, 2004
Outsourcing IT services from other countries is no longer just for the adventurous. The practice is established. And new suppliers are appearing in new territories.
India is the main source of IT services to enterprises in the developed world but many other countries are eyeing the potential from positions much closer to the consuming markets. Mexico and Canada are the new challengers for outsourcing markets in the United States while Russia, Eastern Europe and Israel are the new challengers for Western Europe markets.
India remains the undisputed leader, but China and Russia are emerging as strong contenders according to Ian Marriott, a Gartner vice president and research director. Speaking at Gartner's Spring Symposium in Barcelona, Spain, Marriott said that China's IT market development is meteoric at the moment. He predicts that Russia will capture five percent of offshore service revenue by 2007.
By 2005 nearly a third of European businesses will include other countries as potential sources of IT services. One approach that seems to work is to set up virtual teams working with dispersed implementation centers that focus on specific areas of technical expertise, market sector understanding and geographical familiarity.
It is already possible to see patterns of specialization emerging. Marriott said that Ireland is notable for packaged applications and localization services while Russia has a reputation for high-end software engineering.
Marriott warned that specialization was by no means the only factor to consider when sourcing services from a different country. An enterprise needs to choose the country from which to outsource, using nine broad groups of factors to take into account:
"Offshore is here, it works and it is maturing" Marriott said "It's mainstream."
India is the main source of IT services to enterprises in the developed world but many other countries are eyeing the potential from positions much closer to the consuming markets. Mexico and Canada are the new challengers for outsourcing markets in the United States while Russia, Eastern Europe and Israel are the new challengers for Western Europe markets.
India remains the undisputed leader, but China and Russia are emerging as strong contenders according to Ian Marriott, a Gartner vice president and research director. Speaking at Gartner's Spring Symposium in Barcelona, Spain, Marriott said that China's IT market development is meteoric at the moment. He predicts that Russia will capture five percent of offshore service revenue by 2007.
By 2005 nearly a third of European businesses will include other countries as potential sources of IT services. One approach that seems to work is to set up virtual teams working with dispersed implementation centers that focus on specific areas of technical expertise, market sector understanding and geographical familiarity.
It is already possible to see patterns of specialization emerging. Marriott said that Ireland is notable for packaged applications and localization services while Russia has a reputation for high-end software engineering.
Marriott warned that specialization was by no means the only factor to consider when sourcing services from a different country. An enterprise needs to choose the country from which to outsource, using nine broad groups of factors to take into account:
- Political stability
- Government support
- Cultural compatibility
- Language
- Education system
- Labor pool
- Infrastructure
- Data/IP security
- Cost
"Offshore is here, it works and it is maturing" Marriott said "It's mainstream."