• Software development companies have the biggest demand for external IT resources, followed by gaming companies

• Most of the Maltese outsourcers have 1 to 3 IT specialists on their outsourced teams and value their projects at €0-49K

• Web and mobile solutions are most outsourced, while Cloud solutions are least outsourced in Malta

• Offshoring is the most preferred ITO destination for the Maltese companies

• Shortage of domestic IT skills and personnel is the key driver of decisions to outsource and the biggest challenge facing Maltese non-outsourcers

• Poor communication with ITO vendor’s project management is the key challenge facing Maltese outsourcers

• Future Maltese outsourcers will be focused on nearshore multi-sourcing

• There is a growing demand for the outsourcing services from both ‘traditional’ sectors such as IT (software development), professional and financial services, education and hospitality, and innovative lucrative niches such as mobile computing and digital media

• More UK outsourcers realize the importance of engaging with their ITO partners through innovative business models that are able to provide agility, scalability, speed, pricing transparency and predictable SD/IT spending

• Most of the outsourced projects are small in value (€0-49K) and require only 1–3 IT specialists to complete, which generally debunks the myth that outsourcing is for large companies only and is likely to drive more UK innovative startups and SMEs to adopt SD/ITO in the near future (today, 50% of the UK companies do not outsource, because they mistakenly think they are yet too small and immature for such an undertaking)

• Almost 60% of the UK outsourcers plan to continue with their outsourced operations in the next 12 months, while only less than 17% plan to terminate / backsource their ITO contracts in 2011.

• In 2011, more Dutch outsourcers focus on establishing long-term relationships with the ITO service providers and, therefore, seek reliable partners able to help them solve their business and IT problems quickly and creatively. More Dutch outsourcers go away from mere project outsourcing or dedicated development centers which do not allow them to have a predictable ITO spending and avoid overheads related to the provider’s staff turnover, demotivation etc.

• With the emergence of new technologies and rapid growth of innovative lucrative niches such as mobile computing, casual games development, social media applications, 3D animation and augmented reality, outsourcing is looked at as a way to differentiate from rivals, create ideas and share risks.

• Overall, the 2011 Dutch ITO landscape looks healthier and more mature than in 2010, with an increased demand from small and medium-sized enterprises (SMEs) and for cloud capabilities.

• Many Swedish outsourcers still underestimate the importance of careful and proactive planning of their SD/ITO strategies and, as a result, are focused on immediate short-term savings instead of establishing long-term “win-win” relationships with their ITO service providers. Such attitudes and insufficient outsourcing strategy planning often result in the failed outsourced projects, increased dissatisfaction and back-sourcing, which could have been avoided if the right steps had been taken at the pre-engagement and vendor selection stages

• Most of the Swedish outsourcers partner with their ITO service providers via the Dedicated / Own Team Model

• Web is the most outsourced area of expertise in Sweden, followed by Mobile Computing and Enterprise 2.0

• Most of the Swedish companies single-source their solutions

“All-European IT Outsourcing Intelligence Report 2010: Western and Northern Europe”

Inside

•  Detailed analysis of the key trends and challenges among software development / IT outsourcing companies identified in the course of the 2010 ITO surveys of the following countries: United Kingdom, Germany, Austria, Netherlands and Switzerland

•  Forecasts for the future adoption of software development outsourcing practices in Europe based on the results of the In-House Software Development Survey 2010;

• Expert recommendations on how to improve failing ITO partnerships and make the right outsourcing decisions in the future.

The Report contains thought-provoking findings that generally shape the European ITO landscape in 2010 and benchmark trends anticipated in the years to come.

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• There is an increasing demand for ITO services from high-tech startups and the SME sector actors as well as diverse industry niches, both “traditional” such as finance and construction and innovative such as digital media, online gaming and mobile computing.
  

• Many Danish businesses adopted the outsourced IT / software development at the time of the economic meltdown in order to “keep the head above water” via the decreased IT budgets and operating costs and continue using it now, both for cost leverage and enhanced business focus purposes. On the other hand, there is another huge segment of companies that adopted ITO less than 12 months ago driven by the shortage of appropriate IT resources within Denmark.

• Close-up analysis of the survey findings suggests that although a lot of Danish outsourcers seem to be positive about the essential use of outsourcing, there is still the evidence of inconsistency in what they tend to achieve via the ITO engagement.

• In-house development companies continue to face the same challenges that drove/drive their peers and/or competitors to outsource: scarce local IT talent pool, high cost of domestic resources, slow time-to-market, pressing customers and investors etc. A significant number of the survey participants already view outsourcing as an inevitable practice to be used as a response to their in-house development issues in the future.
  

• The majority of UK gaming industry players surveyed have been outsourcing their games development for 12 to 24 months now

• The most popular outsourcing destinations mix is nearshore (within/close to the same time zone as the UK) + onshore (within the UK)

• The three most outsourced processes within games development are concept development, production and QA/testing

• The top three outsourcing drivers are reduction of operating costs, acceleration of time-to-market (TTM) and freeing in-house resources for other business purposes

• The top three challenges of the outsourced development are: poor communication with project managers/teams on vendor’s side, poor project management on vendor’s side and vendor’s inability to understand client’s business needs and goals

• The two most popular engagement models within gaming outsourcing are Own Development/Agile Team and fixed-price project

• More small and mid-market actors start using ITO services in search of innovation and differentiation

• There is a growing demand for ITO services from innovative lucrative niches such as mobile computing and digital media

• Austrian ITO contracts become small in value and so do project teams

• Many Austrian ITO buyers multi-source their solutions to reduce possible risks of the single-vendor dependence

• Web solutions are most outsourced, while embedded development is least outsourced in Austria

• Nearshore is the most preferred ITO destination for the Austrian companies, followed by onshore

• Top 3 ITO drivers in Austria are: focus on core competences, reduction of operating costs and release of in-house staff for other business purposes

• The key issues in the Austrian ITO are poor communication with vendor’s project management and teams, shortage of skilled resources on vendor’s side and cultural difference

• The greatest demand for ITO services in Norway comes from B2B software development companies

• Most of ITO projects take 3 to 5 and 10 to 19 IT specialists to complete and are valued at € 0-199K

• Web solutions are most outsourced, while Cloud computing is least outsourced in Norway

• Most of the Norwegian companies single-source offshore or onshore

• Most of the Norwegian companies outsource to reduce operating costs, accelerate time to market, access IT staff outside Norway and release in-house staff for other business purposes

• The key issues in the Norwegian ITO are delayed project delivery, poor project management on vendor’s side and cultural difference

• Own Development Team is the most widely used engagement model in Norway

• In the future, more Norwegian ITO buyers will go nearshore

• Maximum project control retention is the key barrier that prevents many Norway’s companies from adopting ITO services

• Cyprus-based B2B IT companies have the greatest demand for ITO services among other industries and verticals

• The prevailing majority of ITO projects fall under the web development domain, require 1 to 5 IT specialists to complete and do not exceed € 49K in value

• Multi-sourcing is an obvious trend of 2011

• Most of the Cyprus outsourcers transfer their development / IT either nearshore alone or distribute them among multiple providers nearshore, offshore and within Cyprus

• Reduction of operating costs is the core driver of corporate decisions to outsource in Cyprus

• The key challenges of the outsourced IT / software development in Cyprus are poor communication with vendor’s project management and executive teams and vendor’s inability to understand their clients’ business objectives

• Key steps that Cypriot companies make to respond to their ITO challenges are ITO partner change, extension of deadlines and dedication of additional managerial resources

• Most of Cypriot companies manage to save 10% to 24% of operating costs from their ITO endeavors

• More than 66% of non-outsourcing companies complain about the high cost of domestic IT resources and personnel and more than 33% complain about the scarce local IT resource pool

• Around 30% of companies already consider outsourcing as an option to leverage costs and access broader resource pools in the future

• Most of German companies surveyed began to outsource their IT function / software development more than 37 months ago

• B2B software development companies are the most active users of the outsourcing services

• Most of ITO projects take 3 to 5 IT specialists to complete and are valued at €500K+

• Web and mobile solutions are most outsourced, while SaaS/Cloud ones are least outsourced in Germany

• Nearshore is the most preferred ITO destination

• Most of German companies outsource to reduce operating costs, focus on core competences, access available IT resources outside Germany and speed up time-to-market

• The key issues in ITO are poor communication with vendor’s teams, change management, cultural difference and poor project management on vendor’s side

• Most of German companies outsource their IT / development to small providers via the fixed-price/time-and-material (T&M) models

• Most of companies refuse to outsource, because they want to have 100% managerial control of own software / IT projects

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The Pan-European IT Outsourcing Intelligence Report 2011 presents the summary of the All-European IT Outsourcing and In-House Software Development research conducted between February and December 2011. In the course of the research the following European countries were surveyed (in alphabetical order): Austria, Cyprus, Denmark, Finland, Malta, Norway, Sweden, Switzerland, Netherlands and United Kingdom.

The key goal of the Report is to identify the differences and similarities in the ways how companies from the above listed countries behave in terms of:

• Overall adoption of IT / software development outsourcing services
• Choosing their IT outsourcing destinations
• Choosing their IT outsourcing service providers
• Responding to the most critical outsourcing challenges
• Managing their vendor relationships
• Cost saving
• Planning their future adoption of IT / software development outsourcing services

All countries to be analyzed in the present Report have been divided into three groups: 1) Nordic Region (Denmark, Finland, Norway and Sweden), 2) DACH, or German speaking region (Germany, Austria and Switzerland) and 3) United Kingdom, Netherlands, Malta and Cyprus.

Within each group the countries will be compared and contrasted in terms of:

• Top three industries that most actively adopt outsourced IT/software development
• Top three IT outsourcing drivers
• Top three IT outsourcing geographies
• Top three IT outsourcing challenges
• Top three IT outsourcing problem solving practices
• Top three IT outsourcing partner search tactics
• Most outsourced areas of expertise
• Most popular IT outsourcing business / engagement models
• Top three IT outsourcing impressions
• Top three reasons keeping companies away from IT outsourcing
• Future IT outsourcing factors and drivers

View / Download "Pan-European IT Outsourcing Intelligence Report 2011" Fields marked with * are mandatory First Name*: Last Name*: Company Name: Phone: Email*: Comments: Enter comments here! Tweet