IT Outsourcing in Europe – Top 5 Trends

According to major industry analysts outsourcing activity in Europe is expected to creep back in 2011. It’s been an incredibly interesting year with a number of new trends and currents shaping the industry and building foundation for the years to come.

Nearshore and Cloud computing hit mainstream, while mobile market saw an emergence of new star, which is going to revolutionize it. Microsoft found itself completely in Cloud with its Azure and Office 365, while Google presented its first PC platform.

That said, the new year can be quite interesting and dynamic for IT outsourcing industry, with new technologies and business models taking a major role.

Levi9 Global Sourcing in conjunction with Nearshore Blog kindly present you with the list of TOP5 trends for IT Outsourcing industry in Europe in 2011.

Trend 1. An increased demand for outsourced IT services from the public sector

According to the European IT Outsourcing consultancy “IT Sourcing Europe” in the first quarter of 2010 IT outsourcing contracts in public sector (EMEA region) accounted for over ?9 billion. The leaders are UK, Germany and Netherlands, with the UK gained a 75 per cent share in the nation’s outsourcing spending.

It is expected that the demand to explore and utilize outsourcing opportunities in European Union will be increasing due to economic uncertainties, lack of qualified labor and growing dependence of public services and economy on IT.

Governments of economically slow achieving countries will most likely help promote outsourcing as an effective cost arbitrage and quality maintenance tool and will definitely adopt outsourcing on different IT and non-IT related projects.

Trend 2. Shortage of IT specialists will drive outsourcing activity in EU

During last several years Western European countries faced a significant shortage in IT skills and resources. In Germany, Netherlands, France and UK analysts reported a huge gap in availability of hi-tech specialists to fill the demand. Germany reported enormous need in hi-tech sphere with overall 400 000 positions unfulfilled.

From other side labor market analysts in leading EU economies reported a fall in popularity of engineering and hi-tech trades. In UK only half as many high school students went on to university to study IT/software development as did five years ago. As a result local educational systems do not produce enough qualified graduates.

On the other hand, 2010 showed a significant increase in IT workforce and skills in Eastern Europe: Romania and Ukraine led in growth in the number of IT specialists with 12.33% and 9.51% growth. The study conducted by “IT Sourcing Europe” for Western European ITO market in 2010 revealed that more than 20% of outsourcing companies admitted their plans to continue outsourcing their IT function in 2011 to get access to better qualified IT resources outside their home countries.

Trend 3. Nearshoring + Agile – The combination of choice

In 2011, more Western European clients will be outsourcing their IT nearshore (to Central and Eastern Europe) or nearshore and within own country, says ITO market Study 2010. Of almost 2,000 non-outsourcing companies polled in the study survey, more than 22% plan to transfer their IT / software development nearshore versus only 11% of those who plan to outsource offshore.

From other side, last year’s Forrester Research report indicated growing popularity of Agile software development methodologies in IT outsourcing projects. Forrester surveyed nearly 1,300 IT professionals and found that 35 percent of respondents stated that agile most closely reflects their development process, with the number increasing to 46 percent if the definition of agile is expanded to include practices such as rational unified process or spiral.

Over the course of 2010 we saw more and more outsourcing practitioners portrayed nearshore and Agile as two core elements to effective commercial software development. From other side IT outsourcing providers put Agile + Nearshore blend at the core of their marketing strategies suggesting increase in productivity, time-to-market and quality of software.

Trend 4. Cloudsourcing

Everything moves to the Web! Everything goes Cloud! Such statements were extremely popular last year. And it is promised to be much more in 2011.

The European Commission has commissioned the report “The Future of Cloud Computing” to capture the development in cloud computing and its relevance and meaning for the European market.

The desire by application groups and business units to grasp the benefits of cloud computing is palpable. From European Comission to U.S. Federal government which announced that, starting in 2012, federal agencies should move to cloud-based solutions “whenever a secure, reliable, cost-effective cloud option exists.”

As it was predicted in 2009 we saw a pragmatic adoption and shaping up the Cloud from both service providers and end-users. Headed by Google, Microsoft and Amazon, almost all IT powerhouses invested heavily into their Cloud portfolio in 2010.

With Microsoft took probably the most crucial step in its history by fully refocusing on the Cloud future. At the core of its strategy Microsoft put its Windows Azure cloud computing platform which moves beyond mere Infrastructure-as-a-Service (IaaS).

Azure, as its stated in company announcement is a Platfrorm-As-a-Service Offering provides a comprehensive set of development tools, services, and management systems to allow developers to concentrate on creating available, scalable applications.

With the growing popularity of Public Clouds where enterprises may use cloud functionality from others, respectively offer their own services to users outside of the company, Microsoft’s Azure platform will find itself well placed for enterprise cloud implementation.

Trend 5. Mobile Development and Integration explode

Global mobile software market has grown over last several years. Major mobile platforms such as Android, iOS and BlackBerry have irreversibly changed mobile landscape. Portable mobile computers or simply Smartphones are the next “must-have” device, as shipments are likely to surpass the shipments of standard feature phones in the first quarter of 2011. That means more than 50 per cent of mobile phone shipments will smartphones.

The phenomena of Mobile Application Stores (Apple, Android, Nokia) has created a completely new industry. As of April 2010 there were at least 185,000 applications available for iPhone and iPod Touch.

From other side, mobile portable devices appeared more essential in enterprise business processes so requiring integration and calibration with existing infrastructures and systems. The mobile extension/configuration became a must-have attribute to almost any newly developed business system.

According to experts global mobile applications market is projected to grow to 17.5 bn during next to years.

Source: Mirasoft

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