The evolution of IT Outsourcing - why trusted partnership matters? by Olha Moroz Delivery Director, SoftServe Poland

Outsourcing for Buyer Talents, expertise Price Hiring and staffing speed Free own resources Less attention to support Less control Communication can cause problems Language barrier issues Security issues

Factors to consider Quality Price Taxes Reputation Business culture compatibility Location Understanding goals Constant management of the business relationship Well-written contracts Strong communication Language Labor pool's skill and size Security and privacy Local education systems ability to support the labor pool Legal culture and stability of a country

Outsourcing for Seller IT outsourcing: from infrastructure to software development, maintenance and support Non-core/Non-strategic business elements No visibility on products roadmap Difficult to get product ownership

Maslow's hierarchy of needs Self-actualization Esteem needs Belongingness and love needs Safety needs Biological and psychological needs

Types of business models Shared Business Ownership Portfolio Ownership Product Ownership Solution provider Team extension FTE Provider

From FTE To outcome based: - business goals - tangible metrics - for user Evolution of outsourcing pricing models

What clients need? Link the benefits of procuring IT services from third party providers to the realization of business objectives

Output and Outcome based service delivery and commercial models (Cognizant)

Managed Service model Management responsibilities BOT model VAS

Verticalization Many clients are looking for more vertical expertise

Technical Product Management Product strategy Release planning Technology selection Backlog creation End-to-end UI design Execution ownership Influence on decision making Customer representative

Contract Contract type Team distribution Contract duration Renegotiation Model based pricing

Multiple vendors Competing vendors Access to internal information Shared goal and agreements

Access to client’s internal environment Infrastructure Procedures and Policies Alignment on management level

The Sourcing Decision Becomes Data- Driven

Crowdsourcing Idea generation Design for a prototype Talent Quick feedback Low cost No management Marketing Low risk Quality Lack of Motivation Keeping Secrets Ethical, Legal Who is the owner?

More Automation, Less Cheap Labor in IT outsourcing Cloud and virtualization Robot-like technologies More human judgement and experience

Indian providers are stepping up Low cost English Big population Tata Consultancy Services, Infosys, Wipro, HCL, Tech Mahindra Labor turnover “Yes Sir” culture More management Time Zone

Eastern Europe Quality vs Quantity - the benefits of outsourcing to Eastern Europe The availability of a highly educated workforce Business culture Cultural similarities Time zones Low attrition rates

Nearshore Domestic sourcing is a plus Predictability in political situation Language, culture, time zone Salaries management No need in H-1B and L1 visas Similar legal regulations

Factors to consider Quality Price Taxes Reputation Business culture compatibility Location Understanding goals Constant management of the business relationship Well-written contracts Strong communication Language Labor pool's skill and size Security and privacy Local education systems ability to support the labor pool Legal culture and stability of a country

Factors to consider Quality Price Taxes Reputation Business culture compatibility Location Understanding goals Constant management of the business relationship Well-written contracts Strong communication Language Labor pool's skill and size Security and privacy Local education systems ability to support the labor pool Legal culture and stability of a country

Factors to consider Quality Price Taxes Reputation Business culture compatibility Location - onsite Understanding goals Constant management of the business relationship Well-written contracts Strong communication Language Labor pool's skill and size Security and privacy Local education systems ability to support the labor pool Legal culture and stability of a country

Factors to consider Quality Price Taxes Reputation Business culture compatibility Location Understanding goals Constant management of the business relationship Well-written contracts Strong communication Language Labor pool's skill and size Security and privacy Local education systems ability to support the labor pool Legal culture and stability of a country Product Ideation Innovative Solutions Value added services Subject matter expertise Domain, market, competitors knowledge End user representative Data as an asset Shared goals and outcomes

Popularity of outsourcing

Expenses on outsourcing

Trends More than 2.4 million jobs outsourced from the US in last 10 years 28% of whole outsourcing is IT Large companies continue to be the leaders in outsourcing, spending a median average of 7.8% of their IT budgets on it Application hosting is the most popular function to outsource, with 62% of organizations doing it IT security outsourcing is increasing 48% companies plan to hire more outsourcers than full time employees in next months Offshore outsourcing to grow by more than 20% annually

Trusted Partnership