Central And Eastern Europe – Capturing The Imagination Of Services Buyers?


IT services buyers are changing their buying requirements. Increasing demand for technologies that drive business innovation agendas, from cloud to analytics to mobile, is creating dramatic upheaval in the technology services market. One result of this, is that while organizations are looking to consolidate their supplier base in traditional service areas like applications outsourcing, buyers are looking to a broader range of providers to acquire specific expertise for these innovation-led engagements.
In light of this shifting backdrop, there is an argument that this will present opportunity to some of the so-called “alternative offshore” locations beyond India. In other words, buyers will look to other regions to try and find some of these specific skills and resources.
My recent report examined this with respect to Central and Eastern Europe (CEE).
The services market in the CEE region remains highly fragmented, with a large number of relatively small providers. However, the region does have a set of key strengths which will position it strongly in the minds of buyers as these broader technology shifts take place. In particular:
  • Aspirations of young digital natives in the region to become programmers or engineers
  • Educational systems focused on key strengths in engineering, math and science
  • Leading providers focus on high-end software engineering with expertise in agile development
  • Leading providers focus on product development services which helps differentiate from traditional IT services
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Brazil, Argentina, And Mexico: Attractive Offshore Locations?

While not the top priority, more than a quarter of respondents to Forrester’s Forrsights Services Survey, Q2 2012, stated they were looking to implement or expand their use of offshore resources. Motivation for new offshore geographies is driven by a range of factors, from seeking new sources of talent to risk mitigation, cost savings, innovation, and local market knowledge and access.


My recently published report analyzes the attractiveness of the three largest economies in Latin America as outsourcing locations: Brazil, Argentina, and Mexico. Latin America presents an attractive location, particularly for US and Canadian companies. However there is wide variation in the suitability between different countries. Some of the high-level findings of the research include:


  • Brazil has clear strengths with its size, scale, wealth of IT skills, and array of local service providers such as BRQ, Ci&T, and Stefanini. Most service providers are focused on the domestic market, however, and don’t have the same export focus as providers in other countries. In addition, overly complex legislative and bureaucratic hurdles, as well as, to some extent, language issues, continue to prevent it from reaching its potential. Ci&T however is one exception, providing a model for Agile development and entrepreneurship.

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Sourcing And Vendor Management Professionals’ Rising Scope Of Responsibilities

As part of my ongoing research into the product development services market, I took a step back to consider how sourcing and vendor management (SVM) professionals have seen their responsibilities increase as new sets of stakeholders start to rely and utilize their expertise and experience.

The first wave really started in 2007 as business buyers started to self-provision both devices and software, representing a key shift from centralized to decentralized IT. And this brought with it a whole new set of stakeholders into the view of SVM professionals.The rising scope of SVM's responsibilities

But it wasn’t long before other stakeholders started to emerge. In 2009, we started to see human resources (HR) and finance appear on the horizon. In HR, this was being driven by trends such as the rise in telecommuting. For example, SVM professionals were increasingly required to work with HR and IT to develop a formal telecommuting policy, as an increasing number of employees worked away from the office.

In the past year we have started to hear from clients about increasing interaction with marketing professionals. In many organizations, marketing works autonomously from IT and SVM but often has large contracts, for example with digital marketing agencies. And so we have gradually seen proactive sourcing professionals reaching out to marketing to gain visibility and bring a greater level of robustness and process expertise into these relationships.

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A New Job Description: Sourcing And Product Development

In my recently published report (SVM's New Stakeholder: Product Development) I argued that product development will become a crucial new stakeholder for sourcing and vendor management (SVM) professionals in the next few years. And we're already seeing some interesting indications that this is starting to happen. For example, I recently came across this job description: Manager, Product Development & Sourcing.

Look at some of the elements of the job description for this sourcing professional:

  • Manages the development process.
  • Partners with the design team.
  • Improves processes and increases efficiencies by partnering with design, merchant, color, and technical design teams.
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Product Development Will Become A Key New Stakeholder For Sourcing And Vendor Management

The recent news of a golfing glove utilizing sensors and apps to allow golfers the opportunity to measure the trajectory and speed of their swing, is reflective of the increasing range of smart products on the market. It also serves to illustrate the new challenges being faced by product development teams where rapid technology change and ever more demanding consumers are transforming even traditional product categories.

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