Novosibirsk October 2002

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Novosibirsk October 2002
Outsourcing to Scandinavia By Jens
Brinksten CEO, Technology Outsourcing Systems
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Agenda

• TOS Market Research
• Outsourcing today
• The Scandinavian market
• Outsourcing advantages / disadvantages
• What to outsource
• What Scandinavian firms look for when choosing
  outsourcing partners
• Key factors for success in the Scandinavian
  market

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TOS Market Research

• Our study confirms that many companies experience
  a lack of IT resources
• lack of people with the necessary expertise in
  specific areas
• difficulties with holding on to the young people
  who are easily bored with routine jobs (often a
  turnover of people of 30 per year)
• periodical work peaks and start up
• time-to-market
• Competencies include Microsoft software
  (server), .NET, SAP, WAP-programming, C, Java,
  XML, database etc.

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Outsourcing today

• The companies apply different strategies to
  address the problem of lack of resources
• outsourcing in-house (to other divisions, mostly
  abroad)
• outsourcing to Scandinavian consulting companies
• outsourcing offshore
• intensive headhunting and job campaigns
• using freelancers

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The Scandinavian Market
The major system integration firms in Scandinavia
are

• IBM
• CSC
• CGEY

• Compaq
• Accenture
• TietoEnator

Norway
Finland
Sweden

• Accenture
• CGEY
• WM-Data
• Adcorre

• IBM
• CSC
• Siemens CG
• CGEY
• WM-Data

Denmark
There are numbers of other players in the market,
but these are the one, we meet as competitors in
our work
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The Scandinavian Market
From where do we see offshore development firms
in the Scandinavian region?

• India
• Ukraine
• Russia
• Baltic

• Ireland
• Baltic
• India
• Russia

Norway
Finland
Sweden

• India
• Czech Rep.
• Baltic
• Ukraine
• Russia
• Philippines

• India
• Hungary
• Baltic
• Russia
• Ukraine

Denmark
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Outsourcing - advantages

• The attitude to outsourcing is generally
  positive, although it is recognised that there
  are some problems involved in this. The main
  advantages are
• Solving a capacity problem in a quick and low
  cost manner (compared to hiring people)
• Solving a competence/knowledge situation
• No hiring of ad hoc staff
• Flexibility in production and delivery

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Outsourcing disadvantages - I

• The main disadvantages are
• Lack of long term internal knowledge
• Lack of building up competences
• Quality control and documentation
• Time-consuming project management
• In some companies (SMEs), it is often required to
  have competencies in-house also especially when
  the outsourced projects are of smaller size

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Outsourcing disadvantages - II

• The main disadvantages of outsourcing abroad are
  (besides those mentioned)
• Different language (communication in general)
• Different culture and political system
• Lack of trust and security
• Lack of control
• Not secured by European/local law
• Close management of the outsourced project is
  required

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What to outsource

• IT projects most needed for outsourcing are
• Standard software programming
• Database programming
• Internet and e-commerce programming (server and
  networks)
• WAP-applications
• Projects for which the necessary competences /
  knowledge is lacking
• Routine jobs in developmental projects

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Outsourcing Partner

• What Scandinavian firms look for when choosing
  outsourcing partners
• A local representative in their own country
  (local contracts)
• Managements models and structured project
  methodology
• Security and reliability
• Flexible and scalable resources
• Fast turn-around times
• Local or international references
• Price (quality to price)

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Key factors for success

• If a Russian company wants to have success in the
  Scandinavian market, they need to have some key
  factors in place
• A local legal entity as representative
• Local marketing and success stories
• Local project management
• Strong project management tools
• Strong communications skills
• Delivery and quality assurance
• Support and service functions
• Quality to price

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Russian firms already have.

• Most medium and large size Russian IT outsourcing
  firms have
• Some of the best trained IT specialists and
  architects. Because of the emphasis on
  mathematical and logical thinking, they can solve
  complex problems, rather than just write code
• In addition, Russian programmers have
  traditionally dealt with limited computing
  resources by developing more efficient, elegant
  programs.
• Flexible and scalable resources
• Many US and European references
• Quality to price (attractive price level)

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Russian firms needs to. I

• To make themselves more attractive, the Russian
  IT firms have to
• Change their approach from an engineer driven
  approach/profile, to a more marketing driven
  approach
• Become more active in alliances and partnerships
• Use more time on profiling efforts, such as
  articles in the International Press and media
• Use the industry organisations more because
  standing together makes you much stronger

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Russian firms needs to. II

• Furthermore the firms need to
• Emphasize service level, guarantees and data
  security
• Improve communication skills
• TRUST
• Improve the approach to foreign firms we are
  not blood-
• suckers, who just want to buy
• cheap labour and then sell it
• in the west with high profit!

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Why are we here..

• We are looking for long-term relations and
  partnerships with companies in Russia
• We want to have close co-operation, and to
  understand you and your firms!
• In Denmark we have a phrase saying
• A sound business practice is a
• business where both parties feel
• they gained from the business

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SPASIBO

• Technology Outsourcing Systems
• H.J. Holst Vej 3-5C
• DK-2605 Broendby
• Denmark
• Phone [phone]
• Fax [phone]
• E-mail office_at_techoutsys.com