Source: LexisNexis

Coventry, United Kingdom– IT Sourcing Europe, a UK-based nearshore IT Outsourcing (ITO) market research and advisory firm, announced today the completion of its All-EuropeanITO research 2010. The research was conducted between April and November 2010 and aimed to explore the major trends, challenges and problem solving among the European companies outsourcing their software development (SD) function offshore (at least 2 time zones away from thehomeland), nearshore (no more than 2 time zones away) and/or within own country. As a result, 1,557 companies from eight countries – United Kingdom, Germany, Austria, Switzerland, Netherlands, Denmark, Norway and Sweden – took part in IT Sourcing Europe’s study.

The study results show obvious similarities and differences in theways how outsourcing companies from different countries behave in terms of outsourcing destination and vendor selection processes.

According to the study findings, low cost of software development and maintenance is the major factor helping determine where to locatethe outsourced development in all countries surveyed except Austria,where the major factor is geographical and cultural proximity. Additionally, Austria shows very high rates of outsourcing nearshore and nearshore and within own country. On the other hand, Austria (along with Norway) shows the smallest ratio of companies outsourcing their SDwithin own country (only 5% of respondents). Other most frequently cited factors (in all countries surveyed) are: available IT resource and talent pool and positive references. Factors such as political/economic stability, legal system maturity, IP security, strong R&D base and proficient English language skills are considered by companies inthe lowest priority.

In order to select an ITO partner, most of the companies surveyed in the UK and Sweden consider low services rates, while most of German, Swiss, Austrian, Dutch and Norwegian outsourcers consider vendor references and positive track record. Availability of specific skills that are hard to find within own country appears to be important for the majority of the UK, German, Dutch, Swedish, Danish and Norwegian companies, while innovative business model is a very decisive factor for German, Swiss, Danish and Norwegian outsourcers.

More interesting and thought-provoking findings are available in IT Sourcing Europe’s “European ITO Intelligence Report 2010: Western and Northern Europe.”

TPI, the largest sourcing data and advisory firm in the world and a unit of Information Services Group, Inc. (ISG), an industry-leading information-based services company, today released data showing that through the first three quarters of 2009, Europe surpassed North America as the leading region in the world for outsourcing spending by Forbes  Global 2000 (G2000) companies and is on track to end the year as the highest-spending region for the first time.

According to the TPI Momentum(SM) Market Trends & Insights 3Q09 Geography Report, European G2000 companies outspent their North American counterparts by approximately $1.2 billion in average annual contract value (ACV) through the third quarter. North America, which led the world in outsourcing spending by G2000 companies in 2008 with $29.6 billion in ACV versus $28.7 billion for Europe, looks poised to miss that mark this year and lose its top spot.

The TPI Momentum Market Trends & Insights 3Q09 Geography Report is the latest in the Market Trends & Insights series, which combines robust market data with expert analysis to provide a completely new perspective on the sourcing industry.

“Understanding the global outsourcing market requires up-to-date information on local and regional dynamics in every part of the world,” said Melany Williams, Partner and Managing Director, TPI Momentum. “This Report offers on-the-ground detail and analysis by TPI experts and advisors to help service providers and others identify and pursue the most promising opportunities – wherever they might lie.”

For each of the six regions, the Report analyzes contract trends, delivery center activity and business and political developments that impact the sourcing industry. Twenty-nine individual country profiles provide more detailed information about the sourcing climate within key markets, including changes in size, opportunities for future growth and penetration rates of service providers.

The Report also introduces a new research methodology, the TPI Outsourcing Viability Index, which compares the strengths and weaknesses of 115 countries on the key attributes that service providers look for when deciding where to establish a service delivery center, including Education & Workforce, Infrastructure & Technology and Political and Economic Stability. TPI designed the Index based on its experience evaluating service delivery locations for hundreds of outsourcing buyers.

Among the notable results from the TPI Outsourcing Viability Index:

– North America and Europe dominate the rankings, with the United States

and Canada at No. 1 and 3, respectively, and six European countries

making the top 10 – the United Kingdom (2), Germany (4), the Netherlands

(6), France (7), Switzerland (9) and Denmark (10).

– While other markets are growing slowly but steadily, India (13) and

China (21) have experienced a rapid rise in spending among their G2000

companies, with China’s market growth appearing to lag India’s by about

two years. Both countries were rated among the top 10 on the Sourcing

Environment dimension.

– Brazil (24), the highest-ranked country in Latin America, also made the

top 10 for Sourcing Environment. The Report found that Latin America is

home to the fourth-highest market opportunity among the regions with $3

billion in additional ACV potential.