...IT Outsourcing & Trends in Asia Pacific and Europe

I think I just couldn't wait any more, so decided to do immediate research on this topic. I started pondering on how things started working for each of the countries in Asia Pacific, Western and Eastern Europe. So I came up with the following SWOT analysis (Source of research from Carnegie Mellon University Benchmarking Study):

What does the Asia Pacific Region offer in Outsourcing?

• Some of the fastest growing software industry in the world are located in Asia
• Growth rate > 35% annually over the past 5 years
• Highly educated & motivated workforce (India, China, Japan ...)
• Strong engineering & manufacturing focus (Japan, S. Korea, China)
• Well-established infrastructures (Japan, S.Korea, China)
• Strong government support (S.Korea, China, Singapore)
• Many countries have adopted “India’s IT Model” as the growing vehicle for economic prosperity
• Highly entrepreneurial & innovative
• Some countries are well adapted to global business but many are still experiencing language and cultural issues
• Some geo-political risks

What does the Western Europe offer in Outsourcing?

• Software industry is steady at > 8 % growth rate annually
• Highly educated in some areas (Ireland, UK, Scandinavia)
• Strong engineering & telecommunication focus
• Very protective of legacy systems & applications
• Governments are still the largest consumption of software
• Very high overhead cost due to bureaucracy & liberal laws
• Outsource “near-shore” to Eastern Europe
• Culturally diverse (languages, legal, business practices etc.)
• Economic polarization – some fare better than others
• IT Polarization: Scandinavia and Ireland are very active where France and Italy are more conservative
• IT education in many countries is slow to catch up with fast technological changes
• High unemployment among the younger generation

What does the Western Europe offer in Outsourcing ?

• Software industry is growing fast but still immature
• Highly educated & large untapped talent pool
• Strong mathematical focus, limited practical experience
• Lack IT infrastructure & support environment for global business
• Governments are the largest consumption of software
• Low labor cost but not well managed
• Receive outsourcing works from Western Europe > USD $ 500 Million
• Culturally diverse (languages, legal, business practices etc.)
• Economic uncertainty due to growing pains – change is difficult
• Political uncertainty - Several social models and directions resulting in high risks business environments
• High unemployment among IT labor force - Most skilled workers left for Western Europe – significant “Brain Drain”
• Limited project management & relationship management skills

More on Trends and final closure comments in the next blog...