Oct. 2, 2007 SDF Outsourcing

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On October 2, 2007 at Pillsbury Winthrop Shaw Pittman LLP in Palo Alto, SDForum hosted a panel on “IT Outsourcing Today: What Matters the Most?” Sylvia Burke of Pillsbury Winthrop introduced moderator Rusty Weston of My Global Career and a panel including Dean Davison of neoIT, Ross Tisnovsky of Everest Research Institute, and Michael Vax of Luxoft Canada.

The discussion focused on results of 213 nationwide interviews with Independent Software Vendors (ISV) professionals and their key priorities, critical needs and best practices when outsourcing. Over ninety percent of ISVs with more than ten million dollars in annual revenue will outsource. The median average budget of an outsourced project is $137,000 but can run into the millions.

Globalization means offshoring more than to just India, which has over a third of the market. Surprisingly, Singapore takes up a fifth of the market. Russia takes 19% and China only 11%. The China numbers do not reveal the enormous domestic demand.

There is a recent trend toward nearshoring. ISVs on both US coasts are more likely to nearshore to Canada than Mexico. Vancouver is the first choice for West Coast ISVs, perceived as being closer and more secure than overseas. ISVs that use providers who multisource tend to be happier with their experience than ISVs that stayed domestic-only.

Despite being able to search the world for people, there is a shortage of people with the right combination of skills and experience. There are simply not that many experienced SQL database developers or XML coders to successfully complete a project on time and on budget. They cannot be found inside ISVs, inside the country and perhaps the world. Cost may be a factor, but finding the right person is crucial.

ISVs worry about the following factors in the following order: location, cost savings, security, attrition rates, education, experience, scalability, communication, language barriers and domain expertise.

Copyright 2007 DJ Cline All rights reserved.