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European Software Development Outsourcing Challenges 2010 Revealed

IT Sourcing Europe reveals major challenges facing software development outsourcing companies in Western and Northern Europe in 2010.

Coventry, United Kingdom, November 27, 2010 --( IT Sourcing Europe, a UK-based nearshore IT outsourcing (ITO) research and advisory firm, has surveyed eight European countries between April and November 2010 for the purpose of benchmarking the most critical challenges of the outsourced software development (SD). Overall, 1,557 companies from the United Kingdom, Germany, Austria, Switzerland, the Netherlands, Denmark, Sweden and Norway participated in the research and anonymously shared their software development outsourcing challenges with a global business community.

According to the study findings, delayed product deliveries and missed project milestones are reported to be the most critical SD outsourcing challenges by most of the UK, German, Swiss, Swedish and Danish companies. Alternatively, a lot of the UK and Dutch companies point to time and cultural difference as the most critical issues of their SD outsourcing. IT Sourcing Europe determined the top three challenges for each country surveyed (in a descending way from most to least faced): UK – delayed delivery, time/cultural difference and poor client-vendor relationships; Germany – delayed delivery, poor project management (PM) on vendor’s side and hidden agenda (actual costs far exceed the expected ones); Switzerland – delayed delivery, hidden agenda and poor client-vendor communication; Austria - poor client-vendor communication, hidden agenda and delayed delivery; Netherlands – time/cultural difference, poor client-vendor communication and delayed delivery; Sweden - delayed delivery, poor PM on vendor’s side and hidden agenda; Denmark - delayed delivery, poor client-vendor communication and poor quality of delivery; and Norway - poor client-vendor communication, delayed delivery and time/cultural difference. The less critical challenges identified are: excessive vendor’s bureaucracy, insufficient data safety, change of management and inability to control and reduce vendor’s staff turnover. The lack of appropriate resources on vendor’s side is considered to be a somewhat critical issue in the process of the successful outsourced development.

To respond to the most critical challenges, most of companies from all of the surveyed countries increase face to face communication, revise their ITO engagements and dedicate more managerial resources. They do it by hiring additional ITO and/or project managers, relocating them to work permanently on vendor’s site, improving the training function for the outsourced teams, changing SD methodology, process, interaction with team members and PMs, cancelling current ITO contracts and looking for new partners. Another big ratio of companies extends project deadlines and brings in outside assistance such as ITO consultancies. The least popular actions include: dedication of more IT resources for the improvement of client-vendor relationships, vendor management redesign and SD outsourcing termination and back-sourcing (bringing development back to house). It is interesting to note that Swedish and Norwegian outsourcers are most active in cancelling ITO engagement and back-sourcing, while German ITO buyers are most reluctant to cancel their outsourced development.

These and other findings are presented in figures in the “European ITO Intelligence Report 2010: Western and Northern Europe.”

Contact Information
IT Sourcing Europe
Viktor Bogdanov

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