Outsource Issue 30 - (Page 74)

APPLICATION DEVELOPMENT We conclude our two-part feature on application development with more expert thoughts on some of the key questions pertaining to this huge and increasingly critical space… HOW WILL THE ADO PROVIDER LANDSCAPE SHAPE UP OVER THE NEXT FEW QUARTERS? by Steven Hall, Partner, ISG In 2012 we’ve seen four key trends develop and these look set to continue over the next few quarters. The outsourcing market as a whole will continue to see major developments and this makes ADO and ADM an exciting place to be in. Offshoring There has been a shift in offshore development from labour arbitrage to productivity with a greater emphasis on business domain expertise. With multi-sourcing now common practice, suppliers seek competitive advantage through microverticalisation. New operating models in application maintenance and significant advancements with the tighter integration of agile development models will continue to provide significant productivity gains that not only reduce costs, but accelerate time to market. Geographical spread Where ADO occurs has been changing considerably and there are some interesting trends worth noting. While traditional providers in India continue to play a large role in the global market, users are no longer keeping all their eggs in one basket and are looking at other regions. Latin America, Argentina and Brazil have been relatively prominent ADO destinations but Mexico and Costa Rica are growing in popularity. In Europe the low cost associated with Eastern European service providers continues to make them a more attractive option for organisations based in Western Europe. By contrast the United States has seen something different: there has been a noticeable shift towards domestic sourcing. Many Indian heritage firms are now developing application expertise in less expensive areas, such North Dakota, Minnesota, Michigan and Georgia. The US has also seen a rise in domestic providers that are partnering with local universities to provide lower-cost human resource with a better understanding of the local market than their counterparts in India and China. This trend will enable these early adopters to be more flexible with their staffing and delivery models and be better placed to navigate the stringent data privacy, regulatory and security environment associated with the faster growing outsourcing markets such as financial services and healthcare. Mobile As the prevalence of mobile computing continues to accelerate, the ADO provider landscape will see the demand for developers continue to grow. Major changes such as the launch of Microsoft 8 and Microsoft app store are likely to further drive this demand. From developing new applications to integrating existing applications, such as Google Maps, into new platforms, mobile is at the front of mind, a trend supplemented further by the growing popularity of BYOD. Cloud Cloud has had a tremendous impact on ADO in three ways. Firstly, applications now need to be refactored for cloud use in much the same way that they had to be altered around the time of Y2K. Considering that reliance on IT has increased radically since 2000, the volume of work will be substantially greater, making this a huge undertaking. And as more and more companies switch to the cloud, it will only become a bigger challenge. Elsewhere the evolution of SaaS – notably include Salesforce.com and Workday – is changing the investment model for global service providers. Software advancements and non-linear revenue models increase the rate and probability of migration to SaaS solutions. This also applies to BPaaS solutions but there has also been a rise in the demand for BPaaS solutions, addressing the need for more targeted solutions. “There’s no magic line between an application and an operating system that some bureaucrat in Washington should draw.” – Bill Gates 74 ● ● ● www.outsourcemagazine.co.uk http://www.Salesforce.com http://www.outsourcemagazine.co.uk

Table of Contents for the Digital Edition of Outsource Issue 30

Peering through the fog
Who moved my world
Bringing on the beeb
Courting the commentariat
Everyone is responsible
Our survey says
Fast money
Smarten up
Seeing the biggest picture
NOA round-up
Embracing enterprise innovation
Customer matters
Application development outsourcing
India: rules for offshoring
Talent gap
The Professionals
Book learning
The outsourcing jigsaw
The legal view
Top ten
NelsonHall round-up
Online round-up
The deal doctor
Inside source
The last word

Outsource Issue 30