Recently, Softheme Director Irina Tsulaia acted as a spokesperson and expert from our company for the latest issue of Your Number magazine published by Kyivstar, one of Ukraine’s largest mobile operators. Mrs. Tsulaia answered several questions about IT outsourcing, its popularity in Ukraine and affordability to small and mid-size business. Please, see the questions and answers below.

Y.N.: What is the level of success of employing IT outsourcing services in Ukraine?

I.T.: Softheme as a service provider in the sphere of software development outsourcing, testing and system integration is mainly focused on North American and European IT markets. This is connected with more mature business culture formed in these regions as well as availability of worked out approach in matters of business idea statement, investment receipt, project requirements documentation, project management, creation of structure necessary for taking a project to market, etc. Accurate approach to financial and legal sides of matter plays a no less important role. At the same time, in 2008 we began to recognize a rising interest of Ukrainian companies towards IT outsourcing. Thus, in 2008 we successfully collaborated with a number of Ukrainian enterprises – representatives of foreign companies in Ukraine – providing solutions relevant for their businesses and enabling them to essentially streamline departments’ operations. Those were such customers as Siemens, Samsung, Kuehne & Nagel, British American Tobacco, Business Standard Bank, etc. Unfortunately, due to financial crisis business activity temporarily decreased but we expect a rising interest in the services of IT outsourcing companies by the end of 2009.

In general, we believe that outsourcing in Ukraine has a big future. Companies more often make decisions not to develop and maintain software products independently but rather turn to specialists who can quickly and competently assess a task and suggest a solution that matches time-frames and corresponds to budget restrains.

The benefits of outsourcing are evident: ability to focus on core business without abstracting to organization and maintenance of IT department operations; ability to reduce time of getting end software solution by means of engaging production capacities of IT services provider; ability to collaborate with specialists who have sufficient experience and knowledge for development of professional software products corresponding to the market requirements.

To start outsourcing is easy. A company should define what exactly they want to automate – create a website, e-shop, inventory management program, marketing analysis application, etc. This can be done in the form of a “brief” after which a company can address to IT services provider. The specialists of the outsourcing company will analyze the request, suggest options of task solution, define terms and budget. If everything satisfies the customer, the decision for cooperation is being made. Then, the services provider formulates technical requirements, performs technology selection, and develops software solution. Usually, development is carried out in a staged manner. After each stage, the developed functionalities are being demonstrated, remarks analyzed, and corrections made. Payment is also stage-wise. The drawback of such approach is possible delaying of delivery date, especially on late stages caused by inconsistency of developed product with customer’s expectations. In order to avoid such outcome it is necessary to critically assess the idea of software product and discuss risks with service provider.

Another interesting alternative of collaboration is “buying” the team of specialists. This variant is possible in case when customer has an in-house IT structure and a specialist (or a group of specialists) for communicating with the team of developers defined. Such contact group is responsible for task assignment for a team, analysis of requirements’ accordance and result quality, breakdown and control of work load. This approach is beneficial to both customer (ensures stability of delivery, succession of knowledge) and service provider (risk reduction in terms of creating a product not meeting actual customer needs). This model is popular in the USA.

Y.N.: Who are your main customers? Are the outsourcing services affordable to small and mid-size business?

I.T.: Currently, we collaborate with large Ukrainian enterprises as well as with representatives of foreign companies in Ukraine. Among our clients are such well-known companies as Kuehne & Nagel and Slavutich Brewery. On Ukrainian market we mainly provide system integration services. In other words, we improve and optimize already implemented software in companies, create applications needed to integrate the software used inside the customer’s company (which is often produced abroad), and provide data conversion services. The latter refers to coordination of formats of data transfer among software of different producers that is being used by the company departments.

Ability to arrange meetings for definition and specification of requirements, to hold trainings for better understanding of application environment, to organize presentations and trainings on customer’s side with immediate feedback – all of this differentiates outsourcing inside Ukraine from remote outsourcing. Large businesses actively employ outsourcing adopting successful experience of foreign colleagues. From time to time we get requests from small and mid-size businesses in Ukraine as well for creating web applications, inventory management systems, etc. However, unfortunately, the cost of services of IT providers is too high for budgets of small and mid-size Ukrainian enterprises. This is due to the fact that many IT companies and freelancers in Ukraine work for Western customers and orient on Western rates; and while the costs themselves on production capacities (computers, servers, broadband) are relatively low, the salaries of qualified IT specialists are much higher than the average salary of a specialist with the same experience in other fields.

Y.N.: What is the market’s average cost of IT personnel outsourcing today?

I.T.: The cost of one IT specialist varies from 12 to 25 USD per hour.

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