European IT Outsourcing Drivers 2010 Revealed

IT Sourcing Europe, a UK-based nearshore IT Outsourcing (ITO) market research and advisory firm, announced today the completion of its All-European ITO research 2010. The research was conducted between April and November 2010 and aimed to explore the major trends, challenges and problem solving among the European companies outsourcing their software development (SD) function offshore (at least 2 time zones away from the homeland), nearshore (no more than 2 time zones away) and/or within own country. As a result, 1,557 companies from eight countries – United Kingdom, Germany, Austria, Switzerland, Netherlands, Denmark, Norway and Sweden – took part in IT Sourcing Europe’s study.

According to the study findings, in 2010 small companies appear to be the most active users of the outsourced software development in the following countries: Germany, Switzerland, Austria, Netherlands, Sweden, Denmark and Norway. United Kingdom is the only country surveyed in which mid-sized companies remain the most active adopters of SD outsourcing.

Regarding the overall SD outsourcing experience, the leading countries, most of whose companies have been outsourcing their SD function for more than 3 years now, are again United Kingdom and Germany, followed by Netherlands, Sweden and Denmark. Austria has the smallest number of companies outsourcing for more than 3 years and the greatest number of companies who first outsourced their development only less than 12 months ago.

Quite interesting findings were made with regards to the most popular destinations for the outsourced SD in 2010. Most of the German, Swiss, Austrian, Dutch, Swedish, Danish and Norwegian companies place their SD nearshore, while only the United Kingdom has the greatest ratio of companies that outsource their SD offshore.

As seen from the study findings, reduction of operating costs remains the most powerful driver of outsourcing decisions in all 8 countries surveyed. Among the other most frequently cited factors are: acceleration of time to market (UK, Germany, Netherlands, Sweden and Denmark), difficulty finding required IT resources and specific skills within own country (all surveyed countries except the UK), pressure from investor(s) and/or executive management to cut down IT/SD budgets (Switzerland and Austria), business development strategy improvement by focusing on company’s core competences (Norway) and freeing in-house resources for other critical tasks (the UK). Thus, cost efficiency and optimization and time to market acceleration are the top 2 pressures that pump up corporate decisions to outsource SD in the UK, Germany and all Nordic countries surveyed; while cost efficiency and willingness to get access to more expanded and qualified IT resource and talent pools are the top 2 outsourcing drivers in Switzerland and Austria.


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