The results of All-European IT outsourcing survey conducted by UK-based advisory firm IT Sourcing Europe reveal the growing popularity of nearshore as a delivery model for sourcing software development and/or other IT functions by European and UK companies.

“More Austrian, Dutch, Swedish and UK IT-enabled companies began to source their software development and other elements of IT to nearhsore providers comparing to the last year” – says report statement.

The UK ITO survey indicated that 30,5 % of the UK outsourcers transfer their software development nearshore which is up 8% from 2010, while 20.5% source to offshore locations, which is down 4.5% from 2010.

For the Dutch and Austrian markets the survey reveals somewhat similar results, indicating that the number of work send by local companies nearshore almost doubles the number of offshore engagements with 32% to 16%.

In the Nordic region on average 30% of companies transfer their SD/IT functions nearshore (up 3% from 2010), while 22.5% of outsourcers go offshore – which is down 2.5% from 2010.

As for the preferences in outsourcing models employed by UK and European companies the first place holds Dedicated/Managed Team model with 41% of UK and (on average) 35% of European companies utilizing for their engagements.

The second most popular outsourcing model used by outsourcers remains Fixed Price (40% of UK, and 32% of European) companies used for their engagements.

Offshore/Nearshore Dedicated Center is the third most popular engagement model (25% of UK, and 28% of European) companies favor this model.

CEE IT Outsourcing Market Growth

Central and Eastern European region is considered as a main nearshore destination for West European and UK companies. Main advantages offered by CEE providers are named as physical proximity, cultural affinity and no time zone difference.

Another survey conducted by Central and Eastern European Outsourcing Association (CEEOA) indicated that the volume of outsourcing market in CEE region has increased significantly over last two years and reached $5 billion in 2010.

Shift in outsourcing delivery preferences to nearshore allowed CEE countries to benefit from nearshoring advantages differentiating themselves from farshore suppliers on proximity criteria.

The largest market growth took place in Romania and Ukraine, with the last one becoming the world’s fifth biggest IT services exporter which market estimated at 800 million USD in 2010.