IT Outsourcing Germany - Facts and Figures 2010

8/8/2019 IT Outsourcing Germany - Facts and Figures 2010

1/15

European IT Outsourcing

Intelligence Report

2010.

Part 2: trends and

challenges among

german outsourcing and

non-outsourcing

companies

IT SourcingEurope Ltd

Coventry, West Midlands

The United Kingdom

2010

Nearshore IT Outsourcing

Market Research &

Consultancy


2/15

European IT Outsourcing Intelligence Report. Part 2: Trends & Challenges Among German Outsourcing and Non-Outsourcing Companies

Copyright IT Sourcing Europe Ltd. 2010. All Rights Reserved.

2

Table of Contents

I. Executive Summary p.3II. German IT Sourcing Survey 2010 p.4

II.I. Key Survey Findings p.4

II.II. Trends Analysis p.5

II.III. Findings Discussion p.8

III. German Software Development Best Practices Survey 2010 p.10III.I. Key Survey Findings p.10

III.II. Trends Analysis p.11

III.III. Findings Discussion p.13

IV. Conclusions and Recommendations p.14


3/15


4/15


5/15

Eu


II.II. Trends Analysis

Cost Reduction Remains the Major Driver of the Deci

Figure 1. Top Three Pressures that drive German corporate dec

software/web development.

In-House Assessment Come First!

Figure 2.Actions that German companies take prior to signing

contract.

difficulty finding IT resources in Germany

speed up time to market

reduce operating costs

asked for references

hired/promoted a manager to lead ITO

process

conduct in-house assessment of areas tobe outsourced

ropean IT Outsourcing Intelligence Report. Part 2: Trends & Challenges Among Ger

sion to Outsource!

sions to outsource

n Outsourcing

Most German Companies Outsour

Development Function!

Figure 3.Volume of the outsourced softw

The Biggest ITO Demand Comes Fr

Figure 4.Most outsourced areas of exper

20%

23%

39%

22%

24%

33%

37%

11

less than 10% 10%-39%

SaaS/Cloud

Embedded Dev.

Mobile

Web 2.0

Enterprise 2.0

8%

an Outsourcing and Non-Outsourcing Companies5

ce 60%-89% of Their Software/Web

are development.

om Enterprise 2.0!

tise in the German ITO.

7%

21%

24%

40%-59% 60%-89% 90%-100%

10%

21%

29%

32%


6/15

Eu


Low Costs and Available Talent Pool Are the Key Driv

the Outsourcing Destination!

Figure 5.Key drivers of the choice of the Outsourcing destinatio

The Better the Track Record The Better the Chance

Client!

Figure 6.Key drivers of the choice of the Outsourcing partner.

positive references

available IT talent pool

low costs

18%

innovative business model

specific skills

positive references


ers of the Choice of

n.

to Win a German

Delayed Product Delivery is the W

Figure 7.Top Three challenges of the out

The Solution is Sought in New Par

Figure 8.The Top ThreeActions that Ger

challenges of the outsourced developme

26%

38%

16%

20%

22%

actual costs exceed the contracted on

poor project management from vendo

side

delayed delive

extend deadlines

increase face-to-face communication

consider new partnerships


eakest Point in Outsourcing!

ourced software development.

nerships!

an companies take to respond to current

t.

es

r's

ry

19%

28%

35%

19%

23%

31%

7


7/15

Eu


Actual Annual Costs of the Outsourced Development

Higher Than Expected!

Figure 9. How actual incurred annual costs of the outsourced d

the expected (contracted) ones.

Outsourcing Saves Up To 25% of Most of the GermaDevelopment Budgets!

Figure 10.Actual savings from the outsourced software develo

about the same 25-49% higher th

up to 25% higher than expected

less than 10%

10%-24%

25%-39%

40%-59%

60%+

21%

22%

11%

8%


Are Up To 25%

velopment compare to

Software

ment.

Most German Clients Are Very Dis

Figure 11. Companies assessment of theileast satisfied and 5 is most satisfied wit

quality, attitude, prices etc

Pricing Structures in the Outsourci

Transparent!

Figure 12. Do German clients know the e

the outsourced development team?

an expected

38%

1

2

9%

41%

28%

12%

10%

68%

clients know exact salaries


satisfied With Their ITO Supplier(s)!

r ITO provider(s) on a 5-point scale, where 1 isthe received services, project execution

ng Partnerships Are Far From Being

xact salary of each of the team members on

3

4

5

32%

clients don't know exact salaries


8/15


9/15


10/15

ll d & h ll

d11


11/15

Eu


III.I. Key Survey Findings

The majority of the German non-outsourcing companiesoftware/web is being developed at the highest possibl

Time it takes to complete a software development projdevelopment and implementation and software bugs/e

Three obstacles to successful in-house development in

Most of the German companies do not outsource, beca100% managerial control of their software developmen

members and because they think that Outsourcing and

will eventually cost them more money, efforts and oth

Most of the surveyed German companies will start constheir software/web development, if they cant find req

within home country.

III.II. Trends Analysis

Slow Time To Market and High Costs Are the Hugest

Successful In-House Software Development!

Figure 15. Top Three challenges of the in-house software devel

bugs/errors fixing

high cost of development

slow time to market

15%


do not think theire quality level.

ct, high cost of

rrors fixing are the Top

Germany.

use they want to have

t project and team

vendor management

r headaches.

ideringoutsourcing

ired skills/resources

Barriers To

pment.

Methodology Improvement Is The

Figure 16. Top Three strategies that Ger

German Companies Do Not Outso

100% Managerial Control of Their

Figure 17. Top Three reasons keeping Ge

software development.

30%

31%

implement distributed development

encourage staff to work overtime

improve SD methodology

are satisfied with in-house

think that outsourcing will cost m

money and 'headaches'

want to have 100% managerial control

IT


Solution!

an companies use to respond to challenges.

rce, Because They Want To Have

IT!

man companies away from the outsourced

19%

29%

33%

SD

re

of

17%

22%

31%

E IT O t i I t lli R t P t 2 T d & Ch ll A G

O t i d N O t i C i12


12/15

Eu


Shortage of Domestic IT Resources Drives Decisions t

Figure 18. Top Three circumstances in which German companieoutsourcing their software/web development.

In Near Future Companies Will Be Sourcing Nearshor

Figure 19. Most preferred destinations for German companies t

outsourced development, if decided to outsource.

if there's need to free in-house resources

if there's need to speed up tome to

market

if there're no required resources in

homeland

within Germany

offshore

offshore + within Germany

nearshore + offshore

nearshore + within Germany

nearshore

10%

10%

12%

13%


o Outsource!

will consider

e!

o locate their

Available IT Resource Pools and L

Figure 20. Top 3 destination selection critthey decide to outsource their software d

Reputation Matters!

Figure 21. Top Three vendor selection crit

they decide to outsource their software d

15%

18%

29%

21%

34%

geographical/cultural proximity

low costs

available IT resource pool

innovative business model

specific skills

positive references

an Outsourcing and Non-Outsourcing Companies

w Costs Map the ITO Destination!

eria that German companies will consider ifevelopment.

eria that German companies will consider if

evelopment.

21%

27%

30%

19%

26%

35%


13/15


14/15


15/15

IT Outsourcing Germany - Facts and Figures 2010

Documents

Transcript of IT Outsourcing Germany - Facts and Figures 2010