forresters webinar 05.13.2010

Valueshore

Euan Davis Euan Davis Principle AnalystForrester Research

September, 2009

Talking points

• Recessionary pressure continues to dominate IT spending

• New ways of contracting emerge linked to sourcing maturity

• Firms seek common service essentials from globally

3 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

configured sourcing deals

• Offshoring no longer just equals “India” but many European minds fixate on the Indian pure-plays

• Clients seek to reduce risk and investigate near-shore options closer to home

Agenda

• Why executives need global delivery strategies

• Firms move nearshore to solve offshore issues

• Spain emerges as a credible offshore destination


Desire to increase applications and

infrastructure outsourcing

Europeans vote with their wallets


Watch for a surge in leveraging global service delivery

outsourcing

Understanding Global Delivery

► Integrating rich domain expertise, broad technical skills, and project management discipline across a network of low-cost locations through consistent and robust processes, tools, and infrastructure to


processes, tools, and infrastructure to maximize the timely delivery of superior IT and BPO solutions

Service scope sticks on application work


August 2009 “How Europeans Tune Global IT Service D elivery Models”




Agenda


The changing offshore location dynamics

• Many countries are jumping on the offshore bandwagon as an economic development strategy

• But just because the Economics Minister says it’s an offshore location does not make it so

• Country assessments focus on government stability


• Country assessments focus on government stability and infrastructure quality

• But not important issues like cultural affinity for offshore work and the scale and health of indigenous vendors

Time zonedifferences

External risks

Countryinfrastructure

• Lack of governance• Lack of management• Weak IT processes/outsourcing process

maturity (requirements gathering, change management, specification writing, testing/QA, SLAs, documentation)

External risks compound internal risks

Cultural and language

differences

Vendor stability

External risks

Aggressive blends exacerbate internal risks


Security

Managementchallenges

• Internal customers unprepared for the rigidity of the outsourcing relationship

• Improper project selection• Unrealistic expectations• No recognition that vendors lack business

knowledge Distance to

vendor

Governance

Source: Forrester Research

European firms seek nearshore skills

• Some countries are more mature than others

– Mature nearshore delivery hubs in Eastern Europe

– Russia rich in software development expertise

– Spanish industry expertise

• Many European service providers focused on Poland


• Many European service providers focused on Poland

– Pure plays have gone further East

• What counts in deciding a nearshore location

– Country stability; infrastructure quality, cultural affinity and the quality of local labour count

• What about Spain?




Agenda


Skills, scale and location underpin Spain’s appeal

• Large skilled IT labour pool

– Check out the ratios

• Industrialized software factories

– Check out how the rates compare


• Domain expertise

– Check out the large firms punching above their weight

• Potential to scale with Latin America

– Spain/Latin American delivery model offering skilled pool

IT salaries feed lower rates


Graduates feed a large local IT labour Pool


Which firms should consider a move to Spain

• Spain as an alternative to India

– Make an inventory of current applications

– Document current best practices

– Pilot applications with the right critical mass

– Invest in the business analyst function


– Invest in the business analyst function

• Spain as a source of complementary skills

– Specific functional process expertise

– Investigate the industry and IT service capabilities

– How can the model scale through Latin America

Spain as an alternative to India? Decision steps


February 2009 “Complementing India With Nearshore Strategies: Spot light On Spain”

Spain as a source of complementary skills?

• Do your internal preparation

• Make sure you have a transformation roadmap—how you will move

• Make sure you have sufficient


• Make sure you have sufficient sourcing deal governance

• Operational control of the nearshore service delivery model

Focus on the site visit and locality for success

• Site visits are an essential part of the sourcing process

– Meet them on Spanish soil

• Leverage the regional autonomy

– Offers negotiation levers on business tax rates


– Offers negotiation levers on business tax rates

– Drive discounts on a deal with location rebates

• Seek out local support organizations

– For advice and back up

– Value shore team; Invest in Spain

If you remember nothing else

European firms need nearshore options2

Global delivery is used in most large outsourcing deals1


Spain offers a credible nearshore destination

3

Euan Davis

[email protected]

Complementing India With Nearshore Strategies:

Thank you


Complementing India With Nearshore Strategies: Spotlight On Spain: http://www.forrester.com/Research/Document/0,7211,46904,00.html

Value Shore

[email protected]

www.valueshore.org

Final Questions, Comments, Discussion?


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