Jari Vlimki Managing Vice President Gartner Nordics and Eastern Europe jari.valimaki@gartner.com 2.4.

2009

Offshore / Nearshore Outsourcing

Offshore / Nearshore Scenario
2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner, Dataquest and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Gartner for IT Leaders is a service mark of Gartner, Inc. or its affiliates.

IT Spending is not increasing globally in 2009

5.00%

Average Weighted IT budget percentage change

4.00% 3.30% 3.0% 3.00% 2.50% 2.00% 1.30% 1.00% 0.16% 0.00% 2.70%

2004
Offshore / Nearshore Scenario

2005

2006
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2007

2008

2009

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85 % of organizations need still transformational changes

Key business expectations for CIOs : 1. Improving business processes, 2. Reducing enterprise costs, 3. Improving enterprise workforce effectiveness, 4. Attracting and retaining new customers, 5. Increasing use of information / analytics

Offshore / Nearshore Scenario

2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner, Dataquest and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Gartner for IT Leaders is a service mark of Gartner, Inc. or its affiliates.

Cut spending, and by doing that release additional funding for your forward looking investments
Intended IT spending direction

85 of organizations need big transformational business and IT change IT spending does not increase CIOs must focus on aggressively cutting spending across all categories but especially on the run side, and by doing that releasing additional funding for their forward looking business and IT investments.
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Offshore / Nearshore Scenario

2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner, Dataquest and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Gartner for IT Leaders is a service mark of Gartner, Inc. or its affiliates.

Use all the cost cutting techniques but focus on green ones

Offshore / Nearshore Scenario

2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner, Dataquest and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Gartner for IT Leaders is a service mark of Gartner, Inc. or its affiliates.

IT Service outsourcing is thus increasing

Offshore / Nearshore Scenario

2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner, Dataquest and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Gartner for IT Leaders is a service mark of Gartner, Inc. or its affiliates.

Offshore / nearshore outsourcing is also increasing, focus more than ever on nearshore outsourcing
Proportion of Offshore / Nearshore Staff
30% 25% 20% 15% 10% 5% 0% 2006 2008 18% 27%

Offshore / nearshore outsourcing growing, costs being the key driver in 90 % of the cases Offshore / nearshore outsourcing is increasing in all the service categories, i.e. application services, infra services and business process outsourcing. Offshore / nearshore outsourcing is moving from large international organizations to medium sized, more local organizations. Nearshore delivery centres are becoming more popular.
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Offshore / Nearshore Scenario

2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner, Dataquest and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Gartner for IT Leaders is a service mark of Gartner, Inc. or its affiliates.

Country Evaluation Model : Offshore / Nearshore

Offshore / Nearshore Scenario

2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner, Dataquest and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Gartner for IT Leaders is a service mark of Gartner, Inc. or its affiliates.

Gartner's 30 Leading Locations for Offshore Services

Americas:
Argentina Brazil Canada Chile Costa Rica Mexico Panama

Europe, the Middle East and Africa:

Czech Republic Egypt Hungary Ireland Israel Morocco Poland Romania Russia Slovakia South Africa Spain Ukraine
8

Asia/Pacific:
Australia China India Malaysia New Zealand Pakistan Philippines Singapore Thailand Vietnam

Offshore / Nearshore Scenario

2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner, Dataquest and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Gartner for IT Leaders is a service mark of Gartner, Inc. or its affiliates.

Additional Locations for Offshore Services

Countries to Watch
Americas: Colombia, Guatemala, Peru, Puerto Rico, Uruguay and Venezuela Asia/Pacific: Indonesia and Sri Lanka EMEA: Belarus, Bulgaria, Latvia, Mauritius, Northern Ireland and Turkey

Countries with Potential

Americas: Cuba, Dominican Republic, Ecuador, El Salvador, Jamaica
and Nicaragua

Asia/Pacific: Bangladesh and North Korea EMEA: Algeria, Armenia, Bahrain, Cyprus, Dubai, Estonia, Ghana, Isle of
Man, Kenya, Kosovo, Lithuania, Macedonia, Madagascar, Malta, Moldova, Saudi Arabia, Senegal, Slovenia, Tunisia and Uganda
Offshore / Nearshore Scenario
2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner, Dataquest and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Gartner for IT Leaders is a service mark of Gartner, Inc. or its affiliates.

Gartner POV on Baltics

Baltic is close, excellent technical skills, culture is similar, very good language skills, but Resource pool is limited, this is a key factor. Minimal foreign direct investment from overseas companies that are looking to set up service delivery centres (either captives of user companies, or service providers wanting to extend their GDM). Absence of Baltic-based service providers marketing their skills outside of the region Lack of government support to develop the countries/region as on offshore / nearshore services hub Costs / Fees are a factor, of course, but not the biggest issue

Offshore / Nearshore Scenario

2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner, Dataquest and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Gartner for IT Leaders is a service mark of Gartner, Inc. or its affiliates.

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Action Points
Countries should take a critical look at their strengths and weaknesses and define their starting point immediately. Countries must ensure that they have a vision of what they want to achieve as offshore / nearshore providers. They also need to have a carefully developed strategy to achieve this. Many countries are now putting offshore outsourcing high on their agenda. The window of opportunity is thus narrow.

Offshore / Nearshore Scenario

2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner, Dataquest and ITxpo are registered trademarks of Gartner, Inc. or its affiliates. Gartner for IT Leaders is a service mark of Gartner, Inc. or its affiliates.

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