Craig Wilson, MD of Ciklum UK
Battered by cutbacks, organisations are under more pressure than ever to demonstrate value for money from their IT projects. Yet the tide has turned on traditional off-shore services as a means of deriving substantial cost savings from IT development, because the results simply are not standing up to scrutiny.
Prescriptive, sequential development processes – favoured by traditional IT outsourcing destinations – are regularly failing to produce results as if there are problems with the steps in the specification, they are typically not flagged to the customer, but instead the process is continued with blindly and an entire project is quickly derailed.
And so it is unsurprising that over the last few years, analysts such as IAG Consulting and Gartner have signalled a growing trend towards ‘backsourcing’.
Here, the ends of corporate tethers are reached and projects are repatriated back to the native shores, where the project costs more to complete.
Why aren’t the traditional destinations learning from their mistakes? Complacency? Inflexibility? Ignorance?
And what alternatives are there? The reason outsourcing was pursued in the first place was the high domestic wage bill, so what alternative are clients left with? Pay low at first and run the risk of failing to complete and ending up with a potentially higher bill, or pay higher and stand an increased chance of success, but with no guarantee?
It is unsurprising then that the ends of corporate tethers are reached and more projects are brought back to native shores. While these projects stand a greater chance of successful, timely completion when brought home, as greater control and flexibility can be exerted, the costs remain high.
Eastern European nearshoring destinations are therefore, seeing this reluctant return to in-house activity as a huge opportunity. The low cost and sheer amount of IT-literate talent combined with the Europhile culture is making the proposition highly attractive. Eastern Europe delivers where offshore services have fallen short, offers the ability to regain control, and is a lifeline for organisations that simply cannot afford to reabsorb projects internally.