Russian Firms See ITES & BPO As Competitive Advantage
As competition in the world offshore software development market gets tougher, advanced services such as IT Enhanced Services (ITES) and Business Process Outsourcing (BPO), create new opportunities for development.
Sep 05, 2002
MOSCOW: As competition in the world offshore software development market gets tougher, advanced services such as IT Enhanced Services (ITES) and Business Process Outsourcing (BPO), create new opportunities for development. Although Russian offshore software developers are not yet marketing ITES or BPOs as separate areas of expertise, a few bigger firms are beginning to provide services of these type. Viewing them as a promising area for future development.
"We are not advertising ITES and BPO type services as a separate area, but we're doing work of that type," said Anatoly Gaverdovsky, chairman of the board of Vested Development Inc. "For some of our customers, we not only provide software development work, but also create infrastructure and provide product management services, which signifies a gradual shift from working on separate projects to the outsourcing of entire business processes."
According to Gaverdovsky, BPO works out well with customers for whom software development is not a core expertise. One of VDI's customers of this kind is Fellowes, a US manufacturer of computer accessories. "We are doing a full-cycle work for Fellowes, from writing program code to product management," Gaverdovsky said. Mr. Gaverdovsky added that VDI is helping firms establish offshore development centers or dedicated development centers. "We've recently completed a 50-people dedicated development center for Pivotal," he said.
Andrei Sviridenko, CEO of Spirit Corporation, a developer of software for telecom companies, said his company has also had some experience in providing services that belong to the ITES area and is planning to do more in that area.
"In 1999, we won a tender announced by Nortel Networks to set up a software development center for ASIC chips. Now we have a dedicated department that develops and verifies ASIC chips for Nortel Networks.Business process outsourcing is an area related to IT consulting, and we're planning to develop it, too, as we have received inquiries for this kind of services from our customers. In a decade of international operations we've collected some technological expertise and, therefore, we view BPO as a prospective area for the future."
"We're not focusing on ITES and BPO," said Maria Dragan, marketing director at Aplana Software. "But some of the services we provide fall into that category."
According to Dragan, Aplana Software, which recently spun-off from the parent company, IT, has been providing maintenance and technical support services for software systems, such as help desks. "We've developed a corporate sales development system for GE Medical Systems and are currently negotiating a contract for maintenance of a mobile sales system, including help-desk support, for the Russian office of Procter&Gamble."
Dragan added that Aplana is currently offering some enhanced services as part of larger software development and maintenance packages, including distant system administration and CRM and Call Center technology.
Experts and industry insiders say that while competition in the international offshore software development industry is stepping up, such high-value added services as BPO and ITES could give Russian programmers a competitive advantage.
"To survive under harsh market conditions, software developers need to focus more on services that are more expensive and require greater intellectual output," VDI's Gaverdovsky said. "Competition is tough, and companies are forced to look at higher value-added services that would help them improve their market positions and differentiate form other companies."
"There has been a shift towards providing more expensive services, and the trend is likely to continue as rates for writing program code are low and can help a company to stay afloat, but will not bring in enough revenues to develop its business. So, working on the BPO and ITES areas is one possible way for Russian software developers in the future."
Meanwhile, the majority of Russian offshore software developers are still focused on simpler program developing tasks and are not considering more sophisticated services, according to Vladimir Ryabikin, technology manager at the National Software Developer Association. "Offshore software development according to tradition model is much more therefore, we view BPO as a prospective area for the future."
"We are not advertising ITES and BPO type services as a separate area, but we're doing work of that type," said Anatoly Gaverdovsky, chairman of the board of Vested Development Inc. "For some of our customers, we not only provide software development work, but also create infrastructure and provide product management services, which signifies a gradual shift from working on separate projects to the outsourcing of entire business processes."
According to Gaverdovsky, BPO works out well with customers for whom software development is not a core expertise. One of VDI's customers of this kind is Fellowes, a US manufacturer of computer accessories. "We are doing a full-cycle work for Fellowes, from writing program code to product management," Gaverdovsky said. Mr. Gaverdovsky added that VDI is helping firms establish offshore development centers or dedicated development centers. "We've recently completed a 50-people dedicated development center for Pivotal," he said.
Andrei Sviridenko, CEO of Spirit Corporation, a developer of software for telecom companies, said his company has also had some experience in providing services that belong to the ITES area and is planning to do more in that area.
"In 1999, we won a tender announced by Nortel Networks to set up a software development center for ASIC chips. Now we have a dedicated department that develops and verifies ASIC chips for Nortel Networks.Business process outsourcing is an area related to IT consulting, and we're planning to develop it, too, as we have received inquiries for this kind of services from our customers. In a decade of international operations we've collected some technological expertise and, therefore, we view BPO as a prospective area for the future."
"We're not focusing on ITES and BPO," said Maria Dragan, marketing director at Aplana Software. "But some of the services we provide fall into that category."
According to Dragan, Aplana Software, which recently spun-off from the parent company, IT, has been providing maintenance and technical support services for software systems, such as help desks. "We've developed a corporate sales development system for GE Medical Systems and are currently negotiating a contract for maintenance of a mobile sales system, including help-desk support, for the Russian office of Procter&Gamble."
Dragan added that Aplana is currently offering some enhanced services as part of larger software development and maintenance packages, including distant system administration and CRM and Call Center technology.
Experts and industry insiders say that while competition in the international offshore software development industry is stepping up, such high-value added services as BPO and ITES could give Russian programmers a competitive advantage.
"To survive under harsh market conditions, software developers need to focus more on services that are more expensive and require greater intellectual output," VDI's Gaverdovsky said. "Competition is tough, and companies are forced to look at higher value-added services that would help them improve their market positions and differentiate form other companies."
"There has been a shift towards providing more expensive services, and the trend is likely to continue as rates for writing program code are low and can help a company to stay afloat, but will not bring in enough revenues to develop its business. So, working on the BPO and ITES areas is one possible way for Russian software developers in the future."
Meanwhile, the majority of Russian offshore software developers are still focused on simpler program developing tasks and are not considering more sophisticated services, according to Vladimir Ryabikin, technology manager at the National Software Developer Association. "Offshore software development according to tradition model is much more therefore, we view BPO as a prospective area for the future."