Market Trends And Competitive Analysis

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Nihal Vats

PGDM 0810-50

A project report submitted in partial fulfilment for the award of Post Graduate Diploma in Management

Institute of Public Enterprise Osmania University Campus Hyderabad

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

DECLARATION

I hereby declare that this Project Report titled Market Trends and Competitors analysis for Innominds Software submitted by me to the Institute of Public Enterprise is a bona fide work undertaken by me and it is not submitted to any other University or Institutions for the award of any degree/diploma/certificate or published any time before.

Nihal Vats PGDM 0810-50 Institute of Public Enterprise Hyderabad. Signature

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

EXECUTIVE SUMMARY Though India is one of the Favourite IT outsourcing destinations for offshore Outsourcing, other players are also emerging. The Companies in India which Target providers from US and Europe may not be able to fetch the projects from these countries in these Difficult times. The main aim of the project is to do a study of the Potential Countries from Europe which are emerging as Outsourcing Destinations. In the project, analysis is done considering the key Economic factors and Indicators such as GDP and Inflation to arrive at the conclusion. In this Project some Competitors from each Country are analysed on their strengths as well as their weaknessess considering Innominds as a benchmark. This Study has tried to analyse the reasons why Innominds has an edge over these Companies from each region. It has also tried to evaluate the various countries and rank them to find the closest competitors of Indian software companies. Suggestions have been given at the end of the study that will improve the market share enjoyed by Innominds.

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

ACKNOWLEDGEMENT First and foremost, I would like to thank the Asst. Vice-President-Business Development of Innomind Software (P) Ltd., Mr. Arpan Banerjee for giving me the opportunity to do my summer internship in his esteemed organization. He has truly enriched my knowledge on what competition is in an industry and how to face it. Ms. Parveen Sultana, of Innomind Software, Hyderabad, has encouraged me in my academic pursuits to a great extent. She has been a constant source of inspiration and the interactions I have had with her has enriched my experience at Innominds. My thanks are due to Mr. S. Satish Kumar, Assistant Professor at Institute of Public Enterprise for his keen interest in updating my project. He has helped me immensely in supplying relevant material to me, as and when required. I am also obliged to the management and staff of Innomind Software for treating me as one of their employees and providing me all the information as and when needed. I take this opportunity to thank each and every employee at Innomind Software, Hyderabad. I express my deep sense of gratitude to my friends Mr.Abhishek Shukla and Mr.Balakrishna Oguri along with whom this study was conducted. Finally, I would like to thank all those who have been involved with my project, for contributing their ideas and suggestions, thereby having helped in making this project a successful one.

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Table of Content

Introduction………………………………………………………………………………….1 Purpose of Study…………………………………………………………………………………3 Objective………………………………………………………………………………………….3 Significance of Project………………………………………………………………………….3 Sampling………………………………………………………………………………………….3 Data Collection………………………………………………………………………………….5 Methodology……………………………………………………………………………………..5 Limitation of the study………………………………………………………………………….5

Review Of Literature………………………………………………………………………..6 Outsourcing: Global Perspective……………………………………………………………..7 Outsourcing: India…………………………………………………………………………….13

Company Profile…………………………………………………………………….……..17 Innominds Software……………………………………………………………………………18

Europe Region……………………………………………………………………………...23

Ukraine………………………………………………………………………………...26 Risk Assessment…………………………………………………………………………………27 Companies & their profile……………………………………………………………………..31

Romania………………………………………………………………………………..35 Risk Assessment…………………………………………………………………………………36 Companies & their profile…………………………………………………………………….40

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Poland………………………………………………………………………………….44 Risk Assessment…………………………………………………………………………………45 Companies & their profile……………………………………………………………………..48

Belarus…………………………………………………………………………………52 Risk Assessment…………………………………………………………………………………53 Companies & their profile……………………………………………………………………..55

Baltic States……………………………………………………………………………60 Estonia…………………………………………………………………………………60 Risk Assessment………………………………………………………………………………....61

Latvia…………………………………………………………………………………..63 Risk Assessment…………………………………………………………………………………64

Lithuania……………………………………………………………………………....67 Risk Assessment…………………………………………………………………………………68

Companies & their profile……………………………………………………………………..70

Analysis & Findings………………………………………………………………………..76

Competitors for Innominds…………………………………………………………….77 Country Analysis……………………………………………………………………….81

Conclusion………………………………………………………………………………….82

Bibliography………………………………………………………………………………..84

Appendices A 6

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

List of Graphs

Graph - 1 Macro Economic Indicator of Ukraine………………………………………….28

Graph - 2 Macro Economic Indicator of Romania………………………………………...37

Graph - 3 Macro Economic Indicator of Poland…………………………………………..46

Graph - 4 Macro Economic Indicator of Belarus………………………………………….54

Graph - 5 Macro Economic Indicator of Estonia…………………………………………..61

Graph - 6 Macro Economic Indicator of Latvia……………………………………………65

Graph - 7 Macro Economic Indicator of Lithuania………………………………………..68

Graph - 8 FDI Inward and Outward of Countries………………………………………….88

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

List of Tables

Table - 1 Snapshot of Ukraine……………………………………………………….26

Table - 2 Snapshot of Romania……………………………………………………...35

Table - 3 Snapshot of Poland………………………………………………………..44

Table - 4 Snapshot of Belarus……………………………………………………….52

Table - 5 Snapshot of Estonia………………………………………………………..60

Table - 6 Snapshot of Latvia…………………………………………………………63

Table - 7 Snapshot of Lituania………………………………………………………67

Table - 8 Competitors of Innominds………………………………………………...77

Table - 9 Country Analysis…………………………………………………………..81

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Chapter 1 INRODUCTION

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

INTRODUCTION

Outsourcing is one of the best practices that helps an organization to reduce their effort in generation of a final product. It makes an organization reduce their functioning cost as well as completion of a project in a definite interval of time. Outsourcing is rather a difficult decision to make, as it has a complicated set of requirements that have to be taken into consideration. Outsourcing has been divided into different type depending on the distance factor of outsourcing destinations. The main types of outsourcing destination considered are Onshore, Nearshore and Offshore outsourcing destinations. Nearshore is the concept in which the distance between the provider and the destination is about 3-4 flight hours. As the nearshore concept is more prevalent in European union (EU) because of the presence of many providers as well as outsourcing destinations Offshore is the concept in which the distance is between the provider and the destination is more than 4 flight hour. Offshore is a tough decision to be taken by an organization though being the most popular concept. Companies taking this decision consider many factors into account such as Quality, Cost, Human resource, Infrastructure, etc. The most popular destinations for offshore are countries in the Asia Pacific region and some parts of America. The slowdown has taken its grip and Indian Outsourcing companies are not able to get the projects from US and as this slowdown has affected the whole world, the best thing that companies can do to reduce their Cost is to outsource. India with its advantage of low cost and highly skilled professionals is best place to incash on this opportunity. This study will assist such an endeavor by leveraging on its strengths.

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

PURPOSE OF THE PROJECT The purpose of the project is to give relevant information on the emerging preferred outsourcing destination and also about the existing competitors of India in IT outsourcing. The project is also aimed at finding and evaluating the competitors of Innominds Software in these Outsourcing Destination countries. OBJECTIVE •

To find out five outsourcing destination in Europe that fetch most of the nearshore projects and identify the competitors of India in IT outsourcing. The destinations are rated accordingly using SWOT analysis.

•

To identify the competitors of Innominds software from each of the selected countries and evaluate them according to some criteria, e.g. HR, successful completed projects, certification, etc. SIGNIFICANCE OF THE PROJECT

Recession has adversely affected the outsourcing industry. Adding to the woes is the recently introduced US act of discouraging companies from outsourcing their projects to offshore destinations. This has made the outsourcing companies to look out for new providers. and the destination that they get concentrated is Europe rather to get an edge over them so that they can prove themselves as better outsourcing destination compared to nearshore outsourcing destinations they need the SWOT of the countries and some points over their competitors. SAMPLING In order to carry out a reliable analysis, competitors and relevant outsourcing destination from the five countries of Europe was chosen, namely Ukraine, Belarus, Baltic states (Estonia, Latvia, Lithuania), Romania and Poland. For all the countries chosen relevant players were selected on the basis of their size and specialization relevant to innominds software. The countries with their major players are as follows: 11

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Ukraine: Capital Kiev •

Mirasoft

•

Outsourcing Ukraine

Romania: Capital Bucharest •

4e Software

•

XII Software

•

IP Devel

Poland: Capital Warsaw •

PGS Software

•

BigosIT

•

Hyper Square

Belarus: Capital Minsk •

Belsoft-Borlas Group

•

Belhard group

•

Qulix System

•

Science Soft

Baltic States Estonia: Capital Tallinn Latvia: Capital Riga Lithuania: Capital Vilnius •

Media Works

•

Euri Techa

•

Alna

•

Elsis

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

DATA COLLECTION All the data used in this study were secondary data which were mainly collected from websites of ITONEWS (www.itonews.eu), Euroitx (www.euroitx.com) and Gartner (www.gartner.com). Data were also collected from the statistics given out by world factbook 2009. The companies data were collected from their respective sites. .

METHODOLOGY

Eight countries including India and three of Baltic States are compared on the basis of their infrastructure, GDP, risk, cost and market opportunity. Rating is given to the countries according to their preference of being considered as an outsourcing destination and their competencies. Apart from secondary data, some related reports and the current scenario of the outsourcing industry has also been considered to facilitate a better study and comparison. The research is a descriptive and qualitative one, data being collected from different websites and reports. The rating for each country is given on the lickert scale of 8 (1-8) according to the capacity of the country. SWOT Analysis has been carried out on each country The rating consists of following as the main component: •

GDP: GDP has been considered taking base year as 2008 for each country

•

FDI (INWARD): FDI is one of the major contributor which shows the infrastructure growth in the country. For all the eight countries, the base year of FDI has been taken at 2008

•

Human Capital: Human capital is taken into consideration for the finding out the availability of the human resource and to compare the strength of particular field.

•

Volume of IT Market: This is considered as comparison what is the current Market.

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

•

Rates: Rates are taken as an average of whole year sgowing that what is the lowest rate in USD to complete the project . this is considered for the cost effectiveness.

•

Inflation: Inflation is the one of the main reasons for the instability in the economy a

•

Telephone Lines: Telephone lines are taken into point ranking as this shows the effectiveness of the communication in the country

•

Airports: This is taken into consideration as it shows the connectivity of the country with the world

For the companies competitive analysis we have taken some criteria as keeping Innominds Software as the benchmark and comparing the important aspects where other companies lead and where they lag . The main point That are taken in to consideration for comparing Companies are as follows: •

Quality Partnership

•

Certificates

•

No. of Years in Function

•

No. of Projects

•

No. of Employees

LIMITATION OF THE STUDY As the project is completely based on secondary data, while comparing the countries and companies, the real scenario may be skipped. As in every country there are many companies, identifying the right competitors has been a daunting task.

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Chapter 2 REVIEW OF LITERATURE

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

OUTSOURCING: GLOBAL PERSPECTIVE

Considering outsourcing in a global prospective we always feel, “what is the harm in outsourcing? After all, jobs lost in one country are gained in another." There are many answers to this question but basically, “Outsourcing replaces higher paying jobs in one country with lower paying job in another country.” It is true almost by definition. After all, the stated purpose of outsourcing is to reduce labor cost. After considering different Repots and Journals I found that India is the most competitive and popular IT-outsourcing destination in the world and tops the ranking of different Global Outsourcing Reports, released by different Ventures. The reports examines the risk and costs profile of the world’s leading outsourcing destinations by proposing two different indexes— the Global Outsourcing Index (GOI), which describes the current competitiveness of doing outsourcing work in the top 20 countries, and the Future Outsourcing Index (FOI), which assesses the long-term (10 years) competitiveness of the top 30 future outsourcing destinations. China takes the lead in the Future Outsourcing Index, followed by India, U.S., Brazil and Russia. In the future, the authors believe that China will most likely become the largest and most competitive outsourcing destination, assuming China makes significant progress in geopolitical and legal arenas. The detailed ranking is as follows: -

Global Outsourcing Index 1. India 2. China 3. Malaysia 4. Philippines 5. Hungry 6. Czech Republic 7. Russia

Future Outsourcing Index 16

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

1. China 2. India 3. USA 4. Brazil 5. Russia 6. Ukraine 7. Romania Competitiveness has been measured along seven dimensions: geopolitical risk, legal risk, cultural risk, economic risk, IT infrastructure risk, human capital risk and IT competency risk. An added dimension is the cost of outsourcing in the respective countries. REGIONAL ANALYSIS

Eastern European Countries (Czech Republic, Ukraine, Latvia, Hungary, Armenia and Poland)

The former Soviet bloc influence tends to move faster to Western habits/culture and economy. The people of these countries found the way to their economic independence by fully integrating a European/American system. They have huge technical potential because of their level of Western world comprehension and their educational system. Their potential for innovation is definitively here. These people are hard and smart workers. Even Russia will make a slower move to the Western system to keep a role in the world economy and compete for integration and try to be as attractive as India or China.

A problem for these countries would be the price of technologies, which is still very expensive compared with the buying power in place and a small language barrier that can be broken easily. In ten years, these countries will be absolutely ideal for high-core competency outsourcing and outstanding software innovation. The stimulation is definitively here.

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Asian Countries (Malaysia, Philippines, Singapore, India and China) India and China will definitively run the show in the next decade. Companies would be wise to choose their outsourcing strategy. It would be a trade-off between cost-effective way to run their business and strategic control over sensitive technologies/price control over time. Political instability and IP protection can be great concerns, but at the same time there is a great opportunity to open wide, new market and export product by increasing the buying capacity of these countries. After being colonized/revolutionized, these countries have the capacity to emerge and are showing economic strength.

American Countries (Brazil, Mexico, Canada, Chile)

These nations still have educational and infrastructure problems. They can be attractive for specific types of jobs, but there are language limitations and an unmotivated workforce. Some countries are developing tourism as greater source of their revenue.

Western European Countries (Ireland, Scotland, France)

These countries are tend to be marginal players in the offshore outsourcing arena. Despite their high level of education and cultural integration that brings talented people to the table, the cost of labor and a labor ruling system that is anti-economical development limit outsourcing here. In fact, these talented populations tend to move away from their own countries (France has 10% of its population living in Canada and the United States). They are also starting outsourcing processes for the same reasons that make them unattractive. Middle East

We would note the complete absence of Middle Eastern countries, except Egypt and Israel. World disparities on that level are creating major clashes of cultures.

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

OUTSOURCING TREND IN CURRENT SCENARIO •

Globalization will continue but at a slower pace Numerous factors, including the severe global economic downturn, repeated product health/safety scares related to Chinese goods, a collapse of commodity prices and the election of a new U.S. administration concerned with the loss of domestic jobs will slow globalization and one of its key manifestations, the global sourcing of services. But the compelling business benefits of global sourcing, especially in tough economic times, will continue to drive growth.

•

Reassessment of current global outsourcing strategies/destinations As buyer focus shifts to cost reduction and cost avoidance, organisations will carefully analyse current and future outsourcing efforts and service provider partners to ensure they are getting services from the most cost-effective location.

•

Steep learning curves As buyers turn to outsourcing/offshoring to help weather economic turbulence, they will need to consider mitigating factors, including service provider capacity levels, prior direct experience and whether engaging a service provider expands or consolidates the supplier base, supplier consolidation/rationalization is viewed as a means to gain economies of scale, reduce overall costs and speed implementation of new efforts to meet shorter term business needs.

•

Volatility in foreign exchange markets Outsourcing buyers and sellers must become more effective at hedging against currency fluctuations that often negatively impact local currencies in emerging markets, creating instability in cost profit margins. The seesawing value of the dollar will make calculating the true costs of outsourcing/offshoring more complicated, challenging buyers and service providers to project longer-term pricing, cost and profitability levels. Efforts to do this should include explicit contractual 19

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

contingencies and, when possible, spreading global service delivery efforts across multiple markets. •

Wage inflation in offshoring markets will abate, at least temporarily As Western markets pause to digest events and determine a go-forward strategy, demand for global outsourcing services will slow temporarily, curbing the recent trend toward wage inflation in offshoring markets and helping top outsourcing destinations remain competitive.

•

Evolving outsourcing business model Buyers will continue to shift away from the use of project-based contract labor in favors of longer term, formalized outsourcing relationships. By committing to longer term and larger scale deals, buyers can get better pricing from service providers, better levels of service and lock-in longer term cost savings strategies.

•

New Outsourcing Industries Global economic downturn will lead to increased outsourcing in Healthcare, Education, Retail, Telecom and Legal Process Outsourcing (LPO) sectors.

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

OUTSOURCING: INDIA The world is discovering the fact that India is a super power when it comes to developing IT solutions. India stands far away From all the Outsourcing Destination in ranking Given by any research or Journal. Giving a glance at why India is such a great destination for IT outsourcing. India's human resources Being the world's second highly populated country, human resources are a boon by itself. Just as the Gulf is renowned for its natural resource of crude oil, and South Africa for its diamonds, India is proud of the abundance and easy availability of its highly qualified and technically skilled English speaking computer professionals; who are key to success in the field of IT outsourcing to India. Cost efficiency of IT outsourcing in India Significant cost saving can be achieved by IT outsourcing to India, owing to the wide gap between the personal costs in India and that of the developed countries. Offshore outsourcing to India offers considerable economical benefits for those who are prepared to exploit the advantages of outsourcing. Standard quality that firms doing IT outsourcing in India guarantee The Indian companies involved in IT outsourcing in India provide high quality work, meeting international standards and complying with the ISO & SEI-CMM standards. Three out of every four SEI-CMM 5 companies worldwide is located in India. Thus India promises quality - IT outsourcing in India as it has the potential to furnish these services perfectly. The reliable communication facilities Excellent telecom, ISP, and cellular networks are available in all cities & towns in the country. India prides in the reliable satellite and submarine communication links that facilitate good band connectivity with the rest of the world. Thus companies engaged in IT 21

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

outsourcing to India, can be in touch with the vendors without any connection hurdles. This plays a significant role in determining the success of offshore IT outsourcing to India. Technologically advanced outsourcing firms in India India's technologies offer excellent software solutions. The applications include Ecommerce, Business Process re-engineering, System Migration, Maintaining Legacy system, System integration etc. India prides in outsourcing facilities that are required to compete with others; which is yet another reason as to why the world prefers It outsourcing to India. Galloping growth in Indian economy The service sector in India contributes 51% of the GDP. Computer software export was prominent with a growth rate of 40%-50% per year during the 90s. India being the second largest software exporter in the world its large business houses and public sector units are growing steadfastly towards raising economic growth.. Stable government facilitating IT growth India has a stable pro - IT government whose policies, economy, GDP growth, taxation, power, telecom, industrial parks & special zones have been helpful in improving the infrastructure as well as communication. The government proves to be a great support for software firms by further providing all the basic facilities required for an outsourcing company to flourish thus playing a major role in contributing to the success and well-being of IT outsourcing to India. Indian government policies •

IT is regarded as one of the top 5 priority industries in India. IT is a part of the national agenda, and policies are framed so as to obtain maximum benefit out of IT outsourcing to India.

•

The liberalization and deregulation initiatives taken by the government are aimed at supporting growth & integration with the global economy. These reforms have 22

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

enabled the entry of foreign companies to the Indian market. FDI investment from NRI's including Overseas Corporate Bodies (OCB's); owned by the NRI's are warmly welcomed in India. •

The new National Telecom Policy has invited private participants to the Indian telecom sector.

•

The IT bill passed in 2000, gives a legal framework for the recognition of electronic contracts, prevention of computer crime and electronic filing of documents. NASSCOM along with the government is playing a notable role in protecting the interests of the IT sector. Thus with all these help, IT outsourcing to India has reached a point of no turning back.

The Quality Accreditation offered to firms engaged in IT Outsourcing to India. Yet another prominent reason behind Indias glittering success in the global IT market is the maintenance of quality. In the recent years, India has been able to offer IT software products and services, which match global standards of quality. As on 31 March 2002, 42 IT outsourcing companies in India achieved SEI-CMM Level 5 assessments. 316 Indian outsourcing companies have achieved quality certifications. More and more IT outsourcing firms are striving for it. Moreover, the Indian software industry has accepted and adopted newly emerging People - Capability Maturity Model (People-CMM). As per 27 June 2002 statistics, India has 85 companies at SEI-CMM Levels assessment for this. These statistics indicate the fact that almost all the companies in the Indian IT sector have realized the value of quality and its accepted standards and that they are vigilant towards achieving it. It will be interesting to take a look at the Global Accreditation, which the Indian IT players have won. 1. ISO 9000 •

The International Organisation for Standards (ISO 9000 series).

•

International set of documents on quality assurance. Written by members of a worldwide delegation, ISO/Technical Committee 176. 23

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE •

3 core quality systems documents

•

Models of quality assurance.

2. SEI-CMM Model •

SEI (Software Engineering Institute) established in 1984 at Pitts berg, USA.

•

The CMM (Capability Maturity Model) of SEI is a framework that describes the key elements of an effective software outsourcing process.

•

CMM - composed of 5 maturity levels.

•

Each level facilitates a layer in the foundation for continuous process improvement.

•

Achieving each level of the model institutionalizes a different component in the software process, resulting in an overall increase in the process capability of the organization.

3. People Capability Maturity Model (People-CMM) •

Process targeted at managing and developing an organization's workforce and adopts the maturity framework of the CMM.

•

Aim - to radically improve the ability of software organizations to attract, develop, motivate, organize and retain the talent needed to continuously improve software development capability.

•

Contains 5 maturity levels.

•

Lay foundations for continuously improving talent, effective teams, and successfully managing the people assets of the organizations.

4. CMM Model •

Aim - to guide organizations in improving ability and processes in development, acquisition and maintenance of products and services.

•

Places proven practices into a structure, which aids to measure the firms maturity and process area capabilities.

•

Establishes priorities for advancement and guides the implementation of these environments. 24

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Chapter 3 COMPANY PROFILE

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COMPANY PROFILE: INNOMINDS SOFTWARE

Founded in 1998, Innominds Software is a specialized Software Product Engineering Services provider based out of San Jose, CA with offshore development centers in Hyderabad. Innominds Software is a leading Outsourced Software Product Engineering Services company which provides dedicated engineering teams at global delivery centers. It has more than 250 employees dedicated towards their responsibilities. It is ISO 9001: 2000 Certified and is working towards ISO 27001 certification CMMi Level 5 assessments in 2007. Innomind provides comprehensive product engineering lifecycle services for software product companies – from product conceptualization, specifications, architecture, and design to the entire product development, testing, implementation, maintenance and support. Continuously improving processes and methodology ensure the success of any project by reducing time to market and providing predictable time, cost, and resources. As Software entrepreneurs work towards identifying market needs and generate ideas to develop a new product. Innominds has engineers capable of understanding these ideas and translating them into world class products. In order to stay ahead of intense competition, Innominds continuously endeavor to exceed customer expectations with consistent innovations in technologies, methodologies and processes. Thus, as a part of the corporate culture, Innominds is highly customer centric and believes in delivering the best quality products every time. Innomind define their core values by 3 I’s, these areINTEGRITY-INQUIRY-INNOVATION SERVICES OFFERING At Innomind complete spectrum of services covers every stage of software product engineering from creation to support:

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

•

Translating product vision or Market Requirements to product definition and requirements

•

Design

and

develop

products

using

industry-standard

design

tools

and

documentation templates The proven, reference able service offerings include: 1. Product engineering life-cycle services a. Software product engineering b. Quality engineering c. Porting and migration services d. UI Engineering 2. IT Services a. ERP b. CRM c. Application Development d. Mobile and wireless e. Re-engineering 3. Design and e-learning a. UI Design b. Information Design c. Visual Design d. E-Learning DESCRIPTION ABOUT SERVICES Product engineering lifecycle services: - Innominds focuses on delivering services across every stage of outsourced software product development lifecycle - from research and prototyping to support and maintenance. 27

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

A) Software product engineering: - The purpose of Software Product Engineering is to consistently perform a well-defined engineering process that integrates all the software engineering activities to produce correct, consistent software products effectively and efficiently. Software Product Engineering involves performing the engineering tasks to build and maintain the software using the project's defined software process and appropriate methods and tools. The software engineering tasks include analysing the system requirements allocated to software, developing the software requirements, developing the software architecture, designing the software, implementing the software in the code, integrating the software components, and testing the software to verify that it satisfies the specified requirements.

B) Quality engineering: - Building a quality software product requires testing throughout the product's life-cycle. Innominds offers a tailored software-testing package as an integral part of product development that plays a vital role in delivering quality products within deadlines in a scalable and integrated environment. Innominds provides Independent Verification and Validation (IVV) services globally to pharmaceutical and biotechnology industries.

C) Porting and Migration services: - All organizations reach a critical juncture in their application development process where they decide to move their legacy applications away from out-dated technologies. Migration and porting is a viable option. This solution requires the right strategy, combined with in-depth knowledge of the latest software technologies and the environments involved.

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

As the expert in GUI and application development, Innomind work with their clients to review existing code and complete a comprehensive assessment to determine the impact of the migration project. Innomind provides a cost/benefit analysis that highlights any trouble spots, estimates the actual time required to complete the migration, documents the potential long term savings, and completes the conversion.

D) UI Engineering: -User interface engineering is the design of computers, machines, mobile communication devices, software applications, and websites with the focus on the user's experience and interaction. The goal of user interface design is to make the user's interaction as simple and efficient as possible, in terms of accomplishing user goals. Innominds UI Engineering services combine diverse engineering capabilities with a conscious user-centered design approach. The primary objective of Innomind engineers is to apply appropriate technology to create software which is useful at every level of solution.

IT Services: - Implementation of enterprise applications has become increasingly complex with the advent of service oriented architectures and web services. This requires both breadth and depth knowledge of operating environment and security. With Innominds custom integration services, companies can achieve robust, efficient integration without the overhead, complexity and cost associated with staffing for specific technical expertise. Using its technical expertise, integration methodology, and business integration framework, Innominds can rapidly design, develop and deploy solutions that work between disparate systems.

Design and e-learning: - Innomind comprises an extensive design team with members of various specializations. It combines the creative powers of information architects, visral and 29

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

information designers, writers and illustrators, with the technical proficiency of experienced technologist. Together they are equipped to create, deploy and manage the range of content rich information systems. Areas addressed by Innominds design and learning products and services are: •

The architecture and design of software and system that deploy content.

•

The design and production of content for new and traditional media.

E-learning systems are a major thrust area of Innominds design team. The team has forged a niche for itself with the design and development of first-of-kind E-learning product Online School of Photography, in collaboration with world leading creative professionals.

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Chapter 4 EUROPE REGION

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EUROPE REGION

Europe is, by convention, one of the world's seven continents. Europe is the world's secondsmallest continent by surface area Europe has enormous potential for development of IT Outsourcing industry. This Region will definitely keep the appreciation of the customers from all over the world. It will attract new clients by professionalism of the experts, Low labor cost, friendly legislation as well as by geographical vicinity and cultural Connection to the Western Europe. Europe as a continent consisting of 45 countries in total and divided in sub regions.

Originally the main destination was to ‘offshore’ in India and the country still leads as an outsourcing destination because it ticks the proverbial boxes of language skills, technical now-how, a mature legal system, cheap labour and stable political system. Similarly the Philippines, which had close military ties to America and hence good language skills, has proven a popular destination. However, since the initial boom in Indian outsourcing in the early 1990s, the EU has expanded to incorporate several countries which can tick as many, if not more, boxes as India and the Philippines but have the advantage of being much closer to home and ruled by common EU laws and best practice. These East European countries, such as Poland, Hungary and the Czech Republic, are proving an increasingly popular destination thanks to high language skills and, particularly for IT excellent universities.

The EU offshore / near shore outsourcing market

Growth of the European spending on off shoring is expected in the next few years. Opinions on the intensity of this growth differ. One source expects a 50% year-on year rise in spending in 2007-2008. Another source forecasts that European spending will achieve an average growth of 6% over 5 years and European companies will spend a total of €146 billion in 2011. IT jobs will move offshore most rapidly from the UK with continental countries matching that trend at a lower level of impact. Up until now it is mainly the larger companies that have started to offshore and nearshore their software and IT services. Although still developing slowly, there is a trend in the Northern European countries (such

32

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

as Sweden, the Netherlands, Denmark and Germany) and the UK towards a greater involvement of SMEs in outsourcing software and IT services. Off shoring / near shoring software and IT services will be the next step for these SMEs. In other countries such as Belgium France, Spain and Italy, SMEs are not ready for off shoring / near shoring yet. According to experts, the SMEs in these countries are only just discovering onshore outsourcing. Driving factors for offshoring are still cost cutting, access to skilled labour and improving quality. The main barriers are cultural and language differences and a lack of trust. The best potential for offshoring / nearshoring lies in software applications and software systems. For professional IT services, the best chances for offshoring / nearshoring lie in implementation and operations management services. Support services have the lowest chance in offshoring / nearshoring.

Offshoring / nearshoring trends •

Nearshoring is one of the most important trends in the EU, due to cultural and geographical advantages and a greater sense of control for EU companies.

•

Security and Intellectual Property Protection are becoming increasingly important.

•

Multi-sourcing will emerge. It is characterised by making use of several suppliers and supply markets to spread risks.

•

Growth, efficiency and the availability of a skilled labour force will become more important next to cost savings.

•

A significant investment in project management offices is expected because of multi-vendor, multi-model and multi-country contracting that is coming up.

•

India will strengthen its position by offering more extensive choices.

•

Many mergers and acquisitions in the EU software and IT services market. 33

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

UKRAINE

Ukraine

Capital – Kiev Population – 46,490,400 GDP (PPP*) – $364.3 billion Map of Ukraine Per capita – $7,832 Time Zone – EET (UTC+2) Summer (DST) – EEST (UTC+2)

IT industry sector in Ukraine has grown considerably during the recent years. Because this country is the closest to Europe out of those which have not yet joined the EU and which has a visa-free entry regime, Ukraine is very attractive to the Western European countries. A large number of small companies provide a whole variety of outsourcing opportunities for the medium and small businesses. Low rates and a huge pool of highly skilled professionals are other advantages of outsourcing to Ukraine. Ukraine is a very convenient place, a so called sluice for collaboration with Russian and Belarusian companies. Volume of IT outsourcing market (USD

544

Mlns) Number of IT outsourcing companies

800

Number of employees involved in IT

14,000

outsourcing 34

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

min

Max

25,920

49,600

Rates per year** (USD)

Luxoft, Softserve, Miratech, Infopulse,

Largest IT outsourcing companies:

Ciklum, Softline, Validio, Aricent, Lohika Ukrainian Hi-Tech Initiative

IT Associations:

www.hi-tech.org.ua

IT Ukraine www.itukraine.org.ua

TABLE - 1 RISK DIMENSIONS: UKRAINE

Political Risk

Recent elections have shown that the country is still very unstable. The new government gives hope that the country might at last attain true freedom and prosperity. Ukraine is a young state, possessing both the material resources and the political will to enter into the world market as a valuable emerging partner.

Legal Risk

Mafia still dictates daily life; no rule of law; piracy, specifically identified USTR foreign IP protection; sanctions imposed; hidden costs of outsourcing. Expert

Cultural Risk

English skills still not very advanced; affinity toward the U.S. and the EU; Ukraine is the largest neighbor of the EU

35

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Economic Risk: GDP—purchasing power parity: $364.3 billion

GRAPH-1

Ukraine has the highest economic growth in Europe Up to year 2004. It has largest economy market and credit rating is Growing; country is hungry to catch up with its neighbors. Ukraine depends on imports of energy, especially natural gas, to meet some 85% of its annual energy requirements. Growth has been undergirded by strong domestic demand, low inflation, and solid consumer and investor confidence. Growth was a sturdy 8.2% in 2003. The middle class plays an important role in the economic and social life. A sufficiently large middle class (certain estimates claim more than 30%) is laying the foundations of social stability and economic development in any country. This middle- class group is reported to include middle and lower-ranked management, skilled workers, craftspeople and people who run their own business. Lack of investments in the IT sector. As the Graph indicates the increase of inflation in the country at the same time decrease in the GDP of the country indicates clearly the effect of the recession over the economic slowdown of the country. As the Forecast of 2009 the GDP will Go in the negative of-6% and at the same time Inflation will reach at 29.7% clearly indicates the unstability and recession effect over Ukraine economy. 36

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

IT Infrastructure Risk:

Telephones: 13 million Internet users: 900,000 Cellular User: 56 million

Good IT infrastructure; however a lot of country wide infrastructure under development; country improving telco trunks and mobile connections. A lack of investments hinders development of IT infrastructure. Ukraine has taken important steps in recent years to improve basic telecommunications infrastructure and to introduce modern operating standards. The best IT infrastructure is in largest cities, where large universities and IT resources are concentrated. The Government has Launched “Innovations Springboard.” Leveraging information and communications technologies for Ukraine’s future. It is aimed at strengthening the process of balanced national development and alleviating poverty though the appropriate and innovative use of Information and communications technologies. There are numerous scientific and technological institutes, universities and R&D companies.

IT Competency Risk:

No project management; many top programmers specialized in various areas Custom Code Writing (body shopping): Average BPO: Poor System Writing Project R&D: Excellent High technological level of development. The country is producing complex systems such as carrier rockets, satellites and space research equipment. Ukraine is a considerable producer of military equipment, including tanks, military transport aircrafts, SAM complexes and optical equipment.

Human Capital Risk:

Labor force: 21.29 million

37

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Good pool of IT-workers (legacy of the Soviet Union), with strong knowledge of mathematics and natural science; good education system (especially hard sciences); good technical universities. The country provided many top computer programmers to the former Soviet Union’s space and military efforts, and much of that expertise has spilled over to the country’s private sector. Ukraine has approximately 1% of the world’s population, but 6% of the world’s physicists, chemists, mathematicians, biologists, computer programmers and other highly trained professionals. Technical schools provide specialized education in many fields and higher education is gained at numerous universities, granting bachelor’s, master’s and doctorate degrees. Ukraine is considered a country with one of the highest levels of education in Eastern Europe.

Costs

Costs are low now, but they won’t stay that way (especially when Ukraine starts negotiations to become a member of the EU). Rates charged for programming in Ukraine are more expensive those in India, but they are 25% cheaper than in Russia.

MARKET OPPORTUNITY MARKET:

2005: 20% 2006: 2% 2007: 23% Compounded growth 2005–2009: 21% (source: Forrester Research) —Population growth; 0.66% The Ukrainian IT market has demonstrated a steady 30%- 40% annual growth for the past three years.

38

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Overall Assessment:

Ukraine’s big resource pool of qualified IT specialists and the low cost of labor make it a competitive location for offshore programming firms. Currently, popularity is low, but growing. The country is making a lot of progress to establish its position as a competitive location in Europe; costs will remain low compared with other countries.

Future Good future. The new government is fighting favoritism and corruption and willing to transform the country into a rulebased economy; Ukraine has the potential to unleash even more capacity to become a vibrant player in the global economy due to a large, highly educated labor force. The challenge is political and economic risks.

COMPANIES AND PROFILE: UKRAINE Mirasoft --- www.mirasoft.com.ua

Mirasoft Ltd (former branch of Swiss company Miratech AG) has been in business since 1992 when it was founded by a group of scientists of the Institute for Cybernetics (leading research institute of the National Academy of Sciences) in Kiev, Ukraine. The significant participation in developing the miracle xrp project started in 1994, which enabled Mirasoft to accumulate know-how in the field of complex business information systems. More than 18 years of Mirasoft's success lays in the two main benefits they bring to their customers - the significant cost reduction and the high technological innovative solutions they provide. Mirasoft is a professional offshore software development center - the dynamically growing company with advanced infrastructure, creative team

39

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

and successful experience in software development. Their competence groups are able to handle software development projects of various scope and scale. Mirasoft software development facilities are located in Kiev, the capital of the Ukraine. Creating innovative business solutions we apply new technologies and recent trends in IT-development. At the same time Mirasoft activity is founded on long-term traditions, best practices and the powerful scientific base of the Ukrainian scientific-research centers. Stability in IT outsourcing •

one of the oldest IT outsourcing company in Central & Eastern Europe

•

experience in offshore software development since 1989

•

certified member of the Offshore Outsourcing Best Practice Association (OOBP)

Nearshore location •

Kiev, the capital of Ukraine (Eastern Europe)

•

2-3 hours flight from major European capitals

•

no visa for citizens of USA and EU

Professional IT personnel: 140+ employees Interaction with customer: responsive and transparent Complete cycle of offshore software development and IT outsourcing services Strong background: more than 200 successfully completed software projects Software development rates: truly attractive Quality Management System •

ISO 9001:2000 certification

•

SEI CMMI Level 3 in the near future 40

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Wide range of development skills: 300+ technologies & tools (C++, C#, ASP.NET, Java, J2EE, PHP, MS SharePoint, Lotus NotesDomino, Crystal Reports, dot Net programming, etc.) Expert in IT technologies •

Microsoft Gold Certified Partner

•

Member of SUN Advantage Program

•

Member of Symbol Partner Select Program

Industry experience: Manufacturing, Telecommunications, Retail/Wholesale, Government, Entertainment, Healthcare, Tourism, Information Technology, …

Outsourcing–Ukraine --- www.outsourcing-ukraine.com

OUTSOURCING UKRAINE Outsourcing Ukraine is an IT Consulting and Development Company located in Sevastopol, in southern Ukraine. Established in 2002, They have already provided cost-effective and reliable IT Solutions to a wide range of clients from the United States and the European Union. Stability in IT outsourcing: •

Experience in offshore software development since 2002

Nearshore location: •

Sevastopol, in southern Ukraine

Professional IT personnel: NA Strong background: More than 100 successfully completed software projects Software development rates: 100 to 5,000 hours of work each 41

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Quality Management System : •

Global Star Certification at Viability Level S (3) appraised by The International Institute for Outsource Management (IIOM).

Wide range of development skills: Microsoft .NET, Microsoft SQL Server, XML Web Services, Windows Server, ASP.NET Ajax, SilverLight Expert in IT technologies: No such certification Industry experience: Healthcare, Insurance, eCommerce, eLearning, Manufacturing, B2B/B2C Solutions

42

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

ROMANIA

Romania

Capital – Bucharest Population – 22,276,056 GDP (PPP*) – $256.9 billion Per capita – $11,800 Map of Romania

Time Zone – EET (UTC+2) Summer (DST) – EEST (UTC+3)

Romania indeed attracts whole Europe, especially Italy and France. This country has the largest number of IT professionals per capita in Europe. Good mastery of Germanic languages. This is the perfect location for the multi-lingual call centers with the particular specialty in Italian and French. All the working in IT sector in Romania should not pay income tax that is 16%, flat.

Volume of IT outsourcing market (USD

416

Mlns) Number of IT outsourcing companies

600

Number of employees involved in IT

12,500

outsourcing Min

Max

30,020

62,320

Rates per year** (USD)

43

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Largest IT outsourcing companies:

SAP, Endava, Romsoft, Totalsoft, Ubisoft, Epicor, Ingenio Software

IT Associations:

ANIS - Employers’ Association of the Software and Services Industry www.anis.ro

Information Technology & Communication Association of Romania (ATIC) www.atic.org.ro

Ministry of Communications and Information Technology www.mcti.ro

TABLE - 2 RISK DIMENSIONS: ROMANIA

Political Risk

Rampant corruption; Hungary amended status law extending special social and cultural benefits to ethnic Hungarians in Romania, who had objected to the law. Romania has good relations with the former Soviet Union states (from the point of view of political doctrine and economic relations) and the Middle East (it has always had very good links to the countries from that region). Romania is in the privileged position in which it can serve as a bridge between the nations and companies from this area.

Legal Risk

Red tape hinders foreign investment; ongoing piracy issues; lack of IPR protection; lack of enforcement, but piracy rate has decreased more than 20% in the past few years. The government is committed to attracting and retaining IT talent by exempting IT professionals 44

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

from income tax payment. There’s a lack of legislation, but the important laws are already being prepared for approval, including copyright, electronic signature, electronic commerce laws and a ruling concerning personal character data processing.

Cultural Risk

Attractive for European outsourcing; same time zone for EU; very little time overlap; understand Western European culture. The business culture and Romanian attitude is European and a very high percentage of the workforce speaks English, French, German or Italian.

Economic Risk

GDP—purchasing power parity: $256.9 billion GDP growth: 4.9%

GRAPH-2

Romania has successfully concluded an IMF agreement; has to achieve a lot to enter the EU. An effective public-private partnership in the IT sector will ensure a competitive and 45

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

consistent rules-based business environment; inflows of foreign direct investment (FDI). Romania’s future integration in the European Union, most likely in 2007, offers investors an established presence in the Common Market.As in the Graph is is clearly mentioned how the growth of Poland in the coming years have been taken a sharp steep in 2008 growth is 7.1 and as per the forecasted it goes to -2.8 whereas in the next forecasted year it is said to take a positive turn.

IT Infrastructure Risk

Telephones: 4.3 million Internet users: 4 million Cellular User: 22.8 million

Poor domestic telco infrastructure, but improving; ranks sixth in the world in the number of certified IT professionals. The government’s IT "Vision for Romania" is summed up in the following mission statement "Romania should aspire to become the ‘Internet hub’ for the Black Sea region. The Romanian have implemented almost all the international standards of mobile telecommunications, and the country has registered one of the largest growths of mobile communication in Europe during the last five years. The extension of the e-Procurement system to a national level has become a key component in the process of modernization of the government in Romania. With electronic procurement, the Romanian government can lower the cost and encourage the private sector to move to B2B. It also creates the premise for lowering corruption, reducing bureaucracy and ensuring transparency. Companies investing in R&D centers in Romania include IBM, Oracle, Siemens, Alvarion and Alcatel.

IT Competency Risk

Highly skilled workforce, focus on specialized software; excellent R&D and creative skills Custom Code Writing (body shopping): Very good BPO: Poor System Writing Project R&D: Excellent 46

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

The Romanian IT industry will become a leading regional supplier of Internet-based services, specialized software and contract manufacturing by 2010 by leveraging national competitive advantages; Romania has a history of scientific achievement and technical expertise.

Human Capital Risk

Labor force: 9.28 million

It has an abundance of well-educatedand highly skilled worker; 20,000 IT certifications; surpasses almost all Europe in its IT resource pool creation.

Cost

Wages are low. It will take seven to eight years for wages in Romania to catch up with the rest of the EU; IT costs are $2,360; very top MCSE annual cost is $12,000.

Market Opportunity

MARKET:

Annual rate of growth of the Romanian IT companies exceeded on average 25% for the last few years, and that of export 60%; IT spending is the lowest in the region. —Population growth: 0.11%

Overall Assessment

Romania has an abundance of welleducated and highly skilled workers deleted Being located in the heart of Europe, Romania is the best choice when targeting both the massive EU market and the emerging CIS region with its unsurpassed labor costs and IT expertise. 47

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Highly-skilled, relatively cheap labor. A very high percentage of the work force speak English, French, German or Italian Major players: More than 5,000 software-producing compa- nies are located in Romania, mainly at the great university centers in Brasov, Bucharest, Cluj, Iasi and Timisoara

Future

Romania will be a promising player in the Future with quality and abundant IT resources in Central Europe. Costs might rise a bit in the future, but on the whole, remain competitive.

COMPANIES AND PROFILE: ROMANIA 4esoftware – www.4esoft.ro

4E Software Romania Ltd. is a software research and development house and IT consultancy partner registered as a brand in December 2000 that brings together a group of high level IT experts. They are a dynamic group of highly trained professionals who are particularly experienced in international multilingual

working

environment.

Company provides the highest quality services through development of powerful, innovative and viable solutions to meet their customer needs both in terms of product specifications and project development time. Stability in IT outsourcing: •

Experience in offshore software development since 2000

48

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Nearshore location: •

Bucharest, the capital city, industrial and financial centre of Romania.

Professional IT personnel: 100+ employee Strong background: More than 200 Projects completed Successfully Quality Management System: •

ISO 9001:2000 certification

Wide range of development skills: Expert in IT technologies : •

Microsoft Gold Certified Partner

•

Member of IBS GmbH

Industry experience

XII Silence Software – www.12silence.com

XII silence Software is a young romanian company, located in Bucharest, established by professionals with years of outsourcing experience in software development, ,web design and web related technologies (web programming, SEO, web hosting) Stability in IT outsourcing: •

Experience in offshore software development since 2000

49

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Nearshore location: •

Bucharest, the capital city, industrial and financial centre of Romania.

Professional IT personnel: 80+ employee Strong background: 100 + successful projects Software development rates Quality Management System: •

ISO 9001:2000 certification

Wide range of development skills: C++, C#, ASP.NET, Java, J2EE, PHP, MS SharePoint, Lotus NotesDomino, Crystal Reports, dot Net programming, etc. Expert in IT technologies : NA Industry experience: NA

IP Devel – www.ipdevel.net

IP Devel was created in October 2000 to provide complex IT outsourcing services, focused for the beginning on software development services. The two cofounders – Mr. Bogdan Putinica and Mr. Daniel Bogdan - decided to set up IP Devel after identifying an ever increasing need on the offshore markets for high quality services combined with the optimization of business costs resulting in an important competitive advantage for clients who embraced this partnership model.

50

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Stability in IT outsourcing : •

experience in offshore software development since 2000

Nearshore location: •

Bucharest, the capital city, industrial and financial centre of Romania.

Professional IT personnel: 80+ employee Strong background: more than 300 successfully completed software projects Software development rates: Quality Management System: •

ISO 9001:2000 certification

•

SEI CMMI Level 3 in the near future

Wide range of development skills: 300+ technologies & tools (C++, C#, ASP.NET, Java, J2EE, PHP, MS SharePoint, Lotus NotesDomino, Crystal Reports, dot Net programming, etc.) Expert in IT technologies : •

Microsoft Gold Certified Partner

•

Member of the Oracle Partner Network (OPN)

•

Partner of GCA, TIBCO, MIT, BRAIN SPOTTING and DOCUMENTUM

Industry experience: Finance & Banking, Multimedia & Entertainment, Automotive, Telecommunication, Microelectronics

51

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

POLAND

Poland

Capital – Warsaw Population – 38,518,241 GDP (PPP*) – $ 631.8 billion Per capita – $16,599 Map of Poland

Time Zone – CET (UTC+1) Summer (DST) – CEST (UTC+2)

Poland, an EU member since 2004, is considered to be an attractive outsourcing location for Europe and especially for Germany due to cultural and time zones compatibility. Good skills of foreign languages, namely English and German add value to the country. There are numerous connections to the US.

Volume of IT outsourcing market (USD

310

Mlns) Number of IT outsourcing companies

400

Number of employees involved in IT

7,800

outsourcing min

Max

32,800

66,000

Rates per year** (USD)

Largest IT outsourcing companies:

Polcard, Euronet, HP Poland, Accenture, 52

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

IBM Poland, Grytek, Business Point, Xerox Polska, COPI KGHM, Archidoc IT Associations:

Polska Izba Informatyki i Telekomunikacji PIIT www.piit.org.pl

TABLE – 4 RISK DIMENSIONS: POLAND

Political Risk

Strong government is relatively stable, but corruption is an issue. There’s growing support for the IT industry; continuing to work with foreign governments; political stability; EU member.

Legal Risk

An inferior and sometimes nonexistent IP and legal system; growing set of incentives, but not as high as other countries; mixture of continental (Napoleonic) civil law and holdover communist legal theory. Changes are gradually being introduced as part of a broader democratization process; limited judicial review of legislative acts; lack of political will by the Polish government to shut down the open air market for selling copyrighted materials, plus a lack of enforcement; lack of legislature to enforce; improvements are slowly made.

Cultural Risk

English not widely spoken, but gaining; German is the major foreign language, affinity and respect for the U.K., U.S. and Germany; lack of customer service.

53

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Economic Risk

GDP—purchasing power parity: $ 631.8 billion GDP growth: 4.9%

GRAPH - 4

Small and medium-size state-owned companies and a liberal law on establishing new firms have encouraged the development of the private business sector. Poland has steadfastly pursued a policy of economic Liberalization throughout the 1990s and today stands out as a success story among CE/EE economies; strong economic growth during past year. Poland is now facing a rather flat growth. EU-membership may provide new impetus; strong foreign investment; fiscal problems; economic reforms under way; losing out at FDI inflows. Poland currently suffers low GDP growth and high unemployment.

IT Infrastructure Risk

Telephones: 12.13 million 54

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Internet users: 9 million Cellular User: 41.3 million Good infrastructure, but some areas need improvement, liberalized telecom policy, strong telecom infrastructure; well developed public infrastructure; good transportation system.

IT Competency Risk

Quality project management lacking; excellent technical experience; highly skilled IT workers Custom Code Writing (body shopping): Average BPO: Growing, but average System Writing Project R&D: Excellent

Human Capital Risk

labor force of 16.92 million.

40,000 graduates per year; biggest Eastern European country; larger labor pool than other EE countries; highest number of universities, excellent education system;

Costs

Still low, but growing. Wages are growing.

Market Opportunity

MARKET:

2005: 20% 2006: 24% 2007: 23% Compounded growth 2005–2009: 21% (source: Forrester Research) 55

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

—Population growth: 0.02% —Market size: $22 million in Poland in 2003

Overall Assessment

Interesting for continental European countries especially. Germany. Good for nearshoring from continental Europe. Major outsourcing for Western defense manufacturers; excellent relationship with the U.K.; pool of educated IT workforce; growth is slowing down; a player in EE/CE market; political stability; losing out on foreign investments; good telecom infrastructure; proximity to Western Europe.

Future

Poland’s outsourcing industry will build on the enthusiasm with regard to the EU-accession; cost will get higher, but due to a larger pool of it workers, Poland will remain a future favorite destination; larger than the Czech Republic or Hungary.

COMPANIES AND PROFILE: POLAND PGS Software – www.pgs-soft.com

PGS is a dynamic software development and information technology outsourcing company with two nearshore development centers in Poland. They provide nearshore outsourcing solutions to enterprises in Europe and offshore to services in USA. Combining proven expertise in technology, and an understanding of emerging business domains, PGS delivers a range of outsourcing services that includes Custom Application Development, Integration

Solutions

and

56

product

engineering.

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

They regains that your business must keep pace with the speed of thought and we believe that your ideas and innovations deserve a better return on IT spend. They address these changing needs of your business with solutions that are not only cost-effective but also fast to deploy, highly scalable and reliable.

While traditional outsourcing concentrates on non-core tasks being shipped out, PGS outsourced software development is targeted on the core tasks, the most critical part of your

rganization. Traditional offshore development is

promoted on the basis of labour cost advantage, whereas PGS nearshore development is built on reducing costs but increasing measurable value from total IT spend. Stability in IT outsourcing : • •

experience in Nearshore/Offshore software development since 2005 full-cycle software development services

Nearshore location: •

Wroclaw, the capital of Poland

•

Second centre in Rzeszow, Poland

Professional IT personnel: 70 + employee Strong background: more than 100 successful projects Software development rates Quality Management System: • •

ISO 9001:2000 certification SEI CMMI Level 3 in the near future

Wide range of development skills: Microsoft .NET and Java EE, scripting tools, such as JavaScript and PHP, together with a deep understanding of state-of-the-art software-as-a57

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

service (SaaS) architectures, cloud computing, mashups and user-generated applications and Web 2.0 social media platforms. Expert in IT technologies: • •

Microsoft Gold Certified Partner Partner of Xceliant(SAAS),PAIIZ and Klaster

Industry experience:

BigosIT – www.bigosit.com

Bigosit delivers a range of outsourcing services that includes custom application development, integration solutions, product engineering, custom website design and development of complex internet systems. We base our offerings on an understanding of clients business requirements and providing dependable

solutions.

Bigosit is an established global software development and information technology outsourcing company with offshore development center in Poland. Being in IT business for over 5 years now bigosit has a strong team of 21 skilled experienced IT experts. Customers are companies of all sizes ranging from startups to large enterprises. Stability in IT outsourcing : •

Experience in Nearshore/Offshore software development since 2003

58

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Nearshore location: •

Wroclaw, the capital of Poland

Professional IT personnel: 21+ employee Strong background: more than 70 successful project Software development rates: Fixed Price model evaluated and charged according to the hour of work Quality Management System: NA Wide range of development skills: Technical expertise: Java Software Development, .NET Development , Adobe Flex / AIR Development, PHP Application development , Web services , N-tier Applications Expert in IT technologies: • •

Microsoft Registered Partner Oracle Network Partner

Industry experience

59

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

BELARUS Belarus

Capital – Minsk Population – 9,724,723 GDP (PPP*) – $79.13 billion Per capita – $7,700 Time Zone – EET (UTC+2) Map of Belarus

Summer (DST) – EEST (UTC+3)

Serious support of IT sector from the Belarus state does promote IT outsourcing in the country. The market consolidation is very strong related to the other Eastern European countries. Belarus has very stable positions in hardware design.

Volume of IT outsourcing market (USD Mlns) Number of IT outsourcing companies Number of employees involved in IT outsourcing Rates per year** (USD) Largest IT outsourcing companies: IT Associations:

288 480 9,500 min Max 26,240 47,360 Epam, IBA, Belhardsoft, Belhard Group, Softclub, System Technologies, B-logic Infopark www.infopark.by

TABLE - 5

60

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

RISK DIMENSIONS: BELARUS

Political Risk Belarus would like to reduce its dependence on Moscow whose financial backing does not come without a quid pro quo. Russia thus benefited from the transfer of half ownership of the local gas transport company to Gazprom, which reduced Belarus's earnings linked to the transit of gas to Europe. But President Alyaksandr Lukashenka's authoritarian grip on power has been an obstacle to rapprochement with the West, whose concretisation would also depend on Belarus implementing the liberalisation measures that could effectively attract the capital needed to modernise the economy. Legal Risk The fall of prices for oil re-exported to the West, deterioration of the terms of trade, the loss of market share in Russia, and the increase in unit labour costs pose problems that call for structural reforms. Industry remains handicapped by low productivity and very limited energy efficiency. A business environment not very conducive to development of the private sector has deterred investment despite a high level of education. The government does, however, have plans to privatise 600 companies by 2009. Human Capital Risk Belarus was an “assembly plant” of the former Soviet Union, which resulted in a skilled and well-qualified labor force, along with a number of technical universities, schools, labs and scientific institutions. The Belarusian education system goes back to the time of the former USSR. There are many universities, institutes and colleges that train high-quality programmers, QA specialists, designers, etc. Every year, about 2,000 highly qualified IT specialists come to the market.

61

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Economical Risk

GRAPH-5

Economic growth began to slow in 2008 and a more significant slowdown is expected in 2009. Subsidised imports of gas from Russia have contributed substantially to the country's economic performance. The gradual alignment of the imports with world gas prices by 2011 thus tends to weaken local industry and spur surges of inflation. Currency issued by the Central Bank reinforces the rise of prices. The slowdown in Russia also affects Belarus. The deterioration of external accounts since 2005 is particularly troublesome in the current difficult financial context. Foreign debt has been growing rapidly. With foreign exchange reserves representing just over a month of imports, the economy depends on foreign aid (IMF, Russia…). Costs One of the main advantages of outsourcing in Belarus is the low labor costs. Typically, the rates of Belarusian software houses are about seven times lower than those of the U.S. or Western Europe Overall Assessment The Belarusian government actively supports IT outsourcing. An offshore-programming

62

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

zone provides a legislative basis for offshore software development. There are also preferential taxation policies. This will help Belarus Outsourcing Industry to grow more in the Coming Years. COMPANIES AND PROFILE:BELARUS Belsoft – Borlas Group ltd. – www.belsoft-borlas.by

BelSoft-Borlas group is a part of a leading Russian IT and e-Business consulting company - Borlas Consulting Group. Our company was founded in 2006 in Minsk, the capital of Belarus, by Russian and Belarusian IT leaders – BORLAS and BELSOFT. Our

mission

is

“Adding

Value

to

Customers’

business

through

comprehensive IT outsourcing and IT consulting solutions”. We aim to become a trusted partner for our clients and business partners, including the leading software and engineering companies around the globe. In our work, we efficiently utilize expertise and experience gained by the both founding companies during more than 14 years on the IT market: largescale comprehensive business automation projects, offshore software development and systems integration projects. With highly skillful software development staff and consultants in Management Information Systems, we service our customers by providing a creative and cost effective array of IT solutions from concepts through implementation to businesses in the United States, Eastern and Western Europe, Russia and Belarus. Stability in IT outsourcing: •

experience in offshore software development since 2006

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MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Nearshore location: •

Minsk, Capital of Belarus

Professional IT personnel: 70+ employee Strong background: More than 50 successful project completed Software development rates Quality Management System: •

ISO 9001:2000 certification

Wide range of development skills: Java2EE, .Net, Win32, Oracle AS, WebSphere, WebLogic, Tomcat/JBoss, IIS, Zope, Oracle Fusion Middleware, MQSeries, MSMQ A2A and B2B integration based on J2EE, XML, Web services, EDI, ebXML etc.

Expert in IT technologies : •

Oracle Partner

Industry experience: Multiple

Belhard – www.belhard.com

Founded in 1994 by two friends Igor Mamonenko and Andrey Grigortsevich, BelHard has now grown into an IT holding giving jobs and opportunities for professional growth to more than 1000 employees. Belhard’s big software development team consists of a firm chain of business-analysts, IT project managers, web developers, testers, and supporters that will flawlessly shape your ideas into cost-effective and reliable products.. Stability in IT outsourcing: •

experience in offshore software development since 1994

64

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Nearshore location: •

Minsk, Capital of Belarus

Professional IT personnel: 1000+ employee Strong background: More than 500 successful completed Project Software development rates Quality Management System: • •

ISO 9001:2000 certification CMM

Wide range of development skills: Java2EE, .Net, Win32, Oracle AS, WebSphere, WebLogic, Tomcat/JBoss, IIS, Zope, Oracle Fusion Middleware, MQSeries, MSMQ, A2A and B2B integration based on J2EE, XML, Web services, EDI, ebXML etc. Expert in IT technologies : NA Industry experience: Multiplle Qulix System – www.qulix.com

Qulix Systems is an international offshore software development company with offices in the UK, Russia and Belarus. It has been successfully operating for almost 7 years and currently employs more than 150 qualified software engineers and managers. Our powerful combination of business process analysis and technical expertise enables us to provide a wide range of IT services across a number of industry verticals, these include finance & banking,

telecommunications,

insurance,

healthcare,

SCM

and

manufacturing. State of the art technology, ISO9001 compliant quality processes and a unique blend of corporate values and enthusiastic, skilled and experienced staff allow Qulix Systems to provide best of breed solutions, services and products to customers across the globe. 65

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

With Qulix now established in the UK, this allows for onsite project management, a secure legal basis for trading and comprehensive insurance while maintaining competitive costs, superior quality and process transparency at the offshore end. Stability in IT outsourcing: •

experience in offshore software development since 2001

Nearshore location: • •

UK, Russia and Belarus Minsk, Capital of Belarus

Professional IT personnel: 150 + employee Strong background: more than 200 successful projects Quality Management System: •

ISO 9001:2000 certification

Wide range of development skills: Expert in IT technologies: NA Technical experts: MS.Net, Java Solutions, J2ME development (MIDP 1.0 and 2.0), Symbian software development, including core level development,

Palm software

development, WinCE/ WinMobile development, Compact Framework, C++, Usage of Bluetooth, GPRS, GPS etc. Industry experience: finance & banking, telecommunications, insurance, healthcare, SCM and manufacturing Science Soft – www.scnsoft.com

66

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Founded in 1989, ScienceSoft Inc. is one of the most mature IT outsourcing service providers in Eastern Europe. During 20 years our custom software development center has successfully completed more than 200 large projects (and some of them took more than 100 man-years). Today we are proud to state that 40% of Fortune 500 companies use software developed by us. Over the 20 years of success, our team has increased up to 250 full time IT experts. Our custom software development center possesses strong experience in custom software development successfully handling all major programming languages and technologies: C++, Java, .Net , as well as Unix/Linux, web and database based technologies. Stability in IT outsourcing: experience in offshore software development since 1989 Nearshore location: •

Minsk, the capital of Belarus

Professional IT personnel: 250 full time IT experts and a network of 100+ developers Strong background: 200+ successfully completed large outsourcing projects Quality Management System: •

ISO 9001:2000 certified, CMMI3 pre-assessed

Wide range of development skills: C++, Java, .Net , as well as Unix/Linux, web and database based technologies. Expert in IT technologies : • •

Microsoft Gold Certified Partner Selected as an IBM Core supplier for technical services 2009

Industry experience: Telecommunications, Healthcare & Life Sciences, Security Engineering, Retail, Media & Entertainment

67

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

BALTIC STATES Estonia, Latvia, Lithuania in Combined is called as Baltic States. The reason to call them Baltic States is the all are situated near the Baltic sea. More or less there Culture Growth and Political Situation are same. Here I will include all the three countries in Short except Latvia, and some important Issues Such as Political Risk, Infrastructure Risk and Economical Risk are included for Estonia and Lithuania. ESTONIA Estonia

Capital – Tallinn Population – 1,342,409 GDP (PPP*) – $13.10 billion Per capita – $12,203 Time Zone – EET (UTC+2) Map of Estonia

Summer (DST) – EEST (UTC+3)

High quality of services and cost effective production attract customers to Estonia – a traditional outsourcing center for the Northern European countries. Estonia is the country that developed Skype and is also well known for the large number of know-how’s of modern IT solutions for public sector.

Volume of IT outsourcing market (USD Mlns) Number of IT outsourcing companies Number of employees involved in IT outsourcing Rates per year** (USD) Largest IT outsourcing companies:

140 110 3,700 min Max 30,600 57,800 Webmedia, Mandator Estonia, Helmes, Skype, Playtech, Microlink, Datel, ProExpert, Cybernet 68

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE IT Associations:

Estonian Association of Information Technology and Telecommunications www.itl.ee

TABLE - 6

RISK DIMENSIONS: ESTONIA

Political Risk The three-way government coalition formed after the March 2007 elections has given signs of internal tensions. Any change of government would, however, have no effect on the pursuit of economy policy. The August 2008 conflict between Russia and Georgia, meanwhile, did nothing to improve Estonia's already strained relations with its powerful neighbor since the riots triggered in April 2007 when Estonian officials moved a statue commemorating the velour of Soviet soldiers. The repercussions of these tensions have nonetheless remained limited to tourism, and rail and port transit traffic. Economical Risk

GRAPH-6

69

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Estonia slipped into recession as early as 2008 due to sagging domestic demand. The fall of property prices and the upsurge of inflation eroded household confidence leading to a reduction in consumption spending. With margins shrinking (under pressure from rising payroll costs), access to credit increasingly difficult, and sales slowing, companies postponed investment projects. And in this unfavorable context, companies have begun to experience difficulties with payments to suppliers. Sectors like construction, consumer goods, automotive spare parts, and, more generally, those that are credit-dependent or labour-intensive have been the most vulnerable. The decline in domestic demand is expected to continue in 2009. Weak foreign demand, meanwhile, will likely stall export growth. And recovery will develop slowly, emerging at best late 2009. Although the inflation rate will ease substantially in the wake of the economic slump and the drop in energy prices, it will be unlikely to be in compliance with Maastricht criteria before 2011. The expected decline in tax revenues will, however, be unlikely to jeopardise the financial solidity of a public sector that ran a surplus until 2007 with government debt moreover virtually nil at four per cent of GDP.

70

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

LATVIA Latvia

Capital – Riga Population – 2,281,305 GDP (PPP*) – $36.49 billion Per capita – $16,000

Map of Latvia

Time Zone – EET (UTC+2) Summer (DST) – EEST (UTC+3) Latvia is business friendly country, what makes it easy-to-outsource. The fastest GDP growth rates in Europe, low taxes (corporate income tax is 15%, flat), but competitive labour costs and high productivity of Latvian professionals attract customers to this country. Volume of IT outsourcing market (USD Mlns) Number of IT outsourcing companies Number of employees involved in IT outsourcing Rates per year** (USD) Largest IT outsourcing companies:

IT Associations:

20 40 600 min Max 27,880 55,760 Nexum IT, Tilde, DEAC, Lattelecom Technology, Exigen Services DATI, SAF Tehnika, TietoEnator Alise, Data Pro, DEAC, ZZ Dats, RIX Technologies, FMS GROUP. Latvian Information Technology and Telecommunications Association - LIKT www.litta.lv Business Software Alliance www.bsa.lv

TABLE – 7

71

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

RISK DIMENSIONS: LATVIA

Political Risk Latvia has been able to engineer a smooth transition from Communist rule; stable government. Russian minority is a concern.

Legal Risk

One of the most efficient tax systems in Europe; rule-based economy; liberal economy modeled after Anglo- Saxon economies; IPR protection is still an issue, but Latvia has improved its intellectual property rights.

Cultural risk

It is extremely hard for a Slav to get rid of Slavic accent when speaking English, however, it is rather easy for Latvians or Lithuanians, whose language is much more similar to English. Great affinity with Nordics.

IT Infrastructure Risk

Telephones: 653,900 Internet users: 936,000 Very good infrastructure; government is making more improvements with the help of Nordics and the EU; telecom is inadequate, but is being modernized to provide an international capability.

IT Competency Risk

Good project management; excellent regarding software development Custom Code Writing (body shopping): Average to good BPO: Average to good System Writing Project R&D: Excellent 72

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Human Capital Risk

Labor force: 1.18 million Much better educated workforce technically. There is a larger percentage of IT students and students of technical sciences in the Baltic States than in the rest of Eastern Europe, especially for software development; good universities; limited supply.

Economical Risk

GDP—purchasing power parity: $23.9 billion GDP growth: 7.4%

GRAPH - 7

Continuing economic growth; accession to the EU offers great opportunities. The majority of companies, banks, and real estate firms have been privatized, although the state still holds sizable stakes in a few large enterprises.

73

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Costs

Costs are low now, but they won’t stay that way. Proximity to Scandinavian companies. The average salary in Latvia and Lithuania is higher than other parts of Eastern Europe and Russia. To our knowledge, telecommunication costs from the ten new Eastern European EU member countries are the highest in Latvia.

Market Opportunity

MARKET:

2005: 20% 2006: 24% 2007: 23% Compounded growth 2005–2009: 21% (source: Forrester Research) —Population growth: 0.71%

Overall Assessment

Excellent destination for outsourcing, proximity to Nordics and the EU, good infrastructure and skills; limited labor pool and an aging population; wages and costs are getting higher due to EU integration.

Future

Together with its neighbours Estonia and Lithuania, Latvia is a major outsourcing center for Northern/continental Europe. It may lose its status as a top 20 player due to an aging population that’s getting smaller as well; limited labor pool; cost would increase dramatically

74

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

LITHUANIA

Lithuania

Capital – Vilnius Population – 3,575,439 GDP (PPP*) – $54.03 billion Per capita – $17,104 Time Zone – EET (UTC+2) Map of Lithuania

Summer (DST) – EEST (UTC+3)

Lithuania has the fastest growing economy and the lowest corporate tax rates in Europe. Macro stability and flexibility, easy travel throughout the European Union, developing innovation policy all together attract the Western European countries. Well educated and professional personnel is guaranteed thanks to the highest number in EU of graduates that reaching 1000 per year.

Volume of IT outsourcing market (USD Mlns) Number of IT outsourcing companies Number of employees involved in IT outsourcing Rates per year** (USD) Largest IT outsourcing companies: IT Associations:

44 90 1,300 min Max 27,880 55,420 Baltic Software Solutions, Sintagma, Sonex Group, Gaumina, Elsis Group Baltic Outsourcing Association www.balticoutsourcing.com Association INFOBALT www.infobalt.lt

TABLE – 8 75

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

RISK DIMENSIONS: LITHUANIA

Political Risk Very low political risk, The October 2008 legislative elections spawned a coalition just as precarious as its predecessor. The broad lines of economic policy are, however, unlikely to be in jeopardy. On the international level, relations with Russia have been strained since the interruption of oil deliveries to the Mazeikiu refinery in July 2006. And Moscow's recognition in August 2008 of the independence of Georgia's two separatists regions, Abkhazia and South Ossetia, did nothing to improve them. Economical Risk GDP(PPP): $54.03 billion GDP Growth % : 4

GRAPH - 8

GDP growth slowed considerably in 2008 affected by the property market downturn and slumping private consumption. Economic stagnation is expected to grip the country in 2009 amid tightening credit conditions, sagging economic-actor confidence, and weakening foreign demand. After surging in 2008, inflation has tended to ease recently as a result of the 76

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

domestic demand slowdown and the fall of raw material prices. Although trending down, the price level will nonetheless remain high, which will very likely prevent the country from adopting the euro before 2012. And excessive inflation previously disqualified the country in 2007. Coface has recorded no noteworthy deterioration of payment behaviour on the part of Lithuanian companies at this juncture. Construction, sectors associated with consumption and, at a more general level, those dependent on bank credit could, however, gradually feel the effects of the crisis.

77

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

COMPANIES AND PROFILE: BALTIC STATES Media Works – www.mediaworks.lt

MediaWorks is a technology company providing consulting and outsourcing services to the Software Development, Education, Financial, Manufacturing, and Media industries alongside IT recruitment and project staffing services.

The Company was set up in 2000 by a group of specialists with experience in IT, Marketing and Finance. The company grew steadily and is further successfully expanding in the Baltics and abroad. MediaWorks' employees have extensive experience and strong capabilities in Business and IT Strategy Consulting, Systems Design and Integration, Programming, Web design, Project

management

and

IT

recruitment

and

staffing

services.

MediaWorks' current clients are major Lithuanian companies and companies in Finland, Sweden, Germany and Australia. Stability in IT outsourcing: •

experience in offshore software development since 2000

Nearshore location: •

Vilnius and Kaunas, Lithuania

Professional IT personnel: 100 + EMPLOYEE Strong background: More than 200 successful project Software development rates Quality Management System: NA

78

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Wide range of development skills: JAVA, EJB, JSP,Javascripts,C, C++,CORBA,VB VBSripts, ASP, Cold Fusion,PHP, Sybase DB, DB2, Oracle DB, MS SQL, PostgreSQL, MySQL. Expert in IT technologies: NA Industry experience: E-commerce, Business Management, Finance, Retailing, Distribution Education

Euri Techa – www.euritecha.lt

“Euritecha” is IT Outsourcing Company founded in Y2001. We provide Software development and Integration services. Software development and Integration services: • Development of the custom software that meets particular client’s needs; • Integration of different software applications into one integrated system. Our company has a Microsoft Certified Partner status (MCP). It guarantees that our specialists know Microsoft technologies and products. Our mission is to provide the best solutions to the customers. It means, that our services benefit the customers the most. For building the best solutions for you, we are choosing appropriate technologies, software and hardware. In project development we are using the international standards (such as IEEE 12207 and CMM), compliant processes. It guarantees the control and predictability of the project results and costs. Project is being implemented in a well-planned and managed way it has definite and particular results.

79

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Stability in IT outsourcing: •

experience in offshore software development since 2001

Nearshore location: •

Kaunas, Lithuania

Professional IT personnel: 100+ employee Strong background: More than 150 successful Project Software development rates Quality Management System : •

IEEE 12207 standard and has incorporated Software Engineering Institute Capability Maturity Model (SEI CMM)

Wide range of development skills: .NET – core competence and other , Microsoft SQL Server, Oracle,.NET, Web Services, BizTalk ,UML

Expert in IT technologies: •

Microsoft Certified partner

Industry experience: NA

Alna – www.alna.com

With Headquarters in Vilnius, Lithuania, Alna is a global provider of IT services. Having started its activities 18 years ago, currently Alna operates in the entire Baltic region as its home market with the aim to become the leader in Baltic States, to compete successfully and expand to other EU countries.

With more than 420 professionals and business consultants in three Baltic 80

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

countries, Alna creates and delivers unique and valuable solutions that ensure customers competitiveness and being one step ahead. Having focused in three main IT areas - IT services and consulting, enterprise resource application solutions and software development – Alna has become a powerful source to offer increased customer value, innovation, speed and flexibility.

Being one of the first in the Baltics to invest into R&D and to introduce innovation centre F1, Alna demonstrates that consistent investments in the development of knowledge and expertise can help to create unique competitive opportunities. Alna suggests using innovations in everyday activities and taking advantage of the opportunities offered by the information society Stability in IT outsourcing : •

experience in offshore software development since 2001

Nearshore location: • •

Vilnius and Kaunas, Lithuania Latvia and Estonia

Professional IT personnel: 120+ employee Strong background: more than 300 successfully completed software projects Software development rates Quality Management System: • •

ISO 9001:2000 certification SEI CMMI Level 2 in the near future

Wide range of development skills: Microsoft, Oracle, Java, PHP, etc Expert in IT technologies : NA 81

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Industry experience: Public Administration, Utilities, Telecommunications, Banking

Elsis – www.elsis.com

he group of enterprises "ELSIS" is composed out of UAB "ELSIS", UAB "ELSIS Biuro Sistemos" (Office Systems), UAB "ELSIS Verslo Sprendimai" (Business Solutions), UAB "ELSIS TS", UAB "ELSIS PRO", OOO "ELSIS Kaliningrad" and ZAO "ELSIS Spb". The group of enterprises "ELSIS" operates in the field of information technologies & telecommunications (ITT) and electronic engineering systems: •

- it designs, develops, manufactures, distributes and maintains the ITT equipment and software products;

•

- it projects, implements, maintains and modernizes the specialized systems of business and technological processes management, the systems of radio communication and the electronic engineering systems, meant for various assignment.

At present the group of enterprises "ELSIS", which started its activity in the year 1991, is one of the largest companies, dealing with the ITT and electronic engineering systems not only in Lithuania, but in the Baltic states as well. In the year 2007 the consolidated income of the group of enterprises "ELSIS" exceeded 83 mln. Litas (24 mln. Euro). More than 200 highly qualified managers, engineers, analysts, programmers and specialists of the other profile work herein. The Quality Management System, implemented in the group of enterprises, meets the requirements of the ISO 9001:2000.

Stability in IT outsourcing • •

one of the oldest IT outsourcing company in Baltic States experience in offshore software development since 1991 82

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Nearshore location: • •

Vilnius and Kaunas, Lithuania Latvia and Estonia

Professional IT personnel: 200+ employees Strong background: more than 200 successfully completed software projects Software development rates: •

ISO 9001:2000 certification

Quality Management System:NA Wide range of development skills: C++, C#, ASP.NET, Java, J2EE, PHP, MS SharePoint, Lotus NotesDomino, Crystal Reports, dot Net programming, etc.) Expert in IT technologies :NA Industry experience:

83

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

Chapter 5 Analysis Findings & Suggestions

84

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

ANALYSIS, FINDINGS & SUGGESTIONS

Romania

Ukrain e

IP Devel

XII Soft

4e Soft

PGS

Bigosit

Hyper Sqr Media

Euri tch

Alna

Elsis

Belsoft

Belhard

Qulix

Science

Mirasoft

Otrc Ukr

N

Y

Y

Y

N

N

Y

N

N

N

N

N

Y

Y

N

Y

Y

N

N

N

Y

N

N

N

N

N

Y

N

N

N

N

N

Y

N

N

N

N

N

N

N

N

N

N

N

N

N

N

Y

N

Y

Y

Y

Y

Y

N

Y

N

Y

Y

Y

Y

Y

Y

Y

Y

N

Y

Y

N

N

N

N

N

N

Y

Y

N

N

Y

Y

N

N

N

N

5+

Y

Y

Y

N

Y

Y

Y

Y

Y

Y

N

Y

Y

Y

Y

Y

Y

10+

N

N

N

N

N

N

Y

N

N

Y

N

Y

N

Y

Y

N

Y

15+

N

N

N

N

N

N

N

N

N

Y

N

Y

N

Y

Y

N

N

100+

Y

Y

Y

Y

N

N

Y

Y

Y

Y

N

Y

Y

Y

Y

Y

Y

200+

Y

N

Y

N

N

N

Y

N

Y

Y

N

Y

N

Y

Y

N

Y

300+

Y

N

N

N

N

N

N

N

Y

N

N

Y

N

N

N

N

N

100+

N

N

Y

N

N

Y

Y

Y

Y

Y

N

Y

Y

Y

Y

Y

Y

200+

N

N

N

N

N

N

N

N

N

Y

N

Y

N

Y

N

N

Y

300+

N

N

N

N

N

N

N

N

N

N

N

Y

N

N

N

N

N

No of employee

Oracle ISO 9001 :200

Certificate s

Sun Microsyst ems

Quality Partnership

Microsoft

Y

Ot her s

Belarus

No of Years In Function

Baltic States

No of projects

Company

Poland

Innominds

COMPETITORS FOR INNOMINDS

85

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

The companies have been analyzed and tabulated according to the objective mentioned earlier which is, to evaluate the companies of the respective countries keeping Innominds as benchmark. ‘Y’ indicates Yes and ‘N’ indicates No in the table. Overall Summary of the Table is as follows: ANALYSIS: ROMANIA As in the table mentioned above three competitors for Innominds has been chosen from Romania and have been examined over some criteria. Detailed information about the companies are mentioned in the companies profile of the country. From the table we can find out that Innominds have an edge over the companies on almost all the criteria. The following are the areas where Innominds lag and lead. Innominds Weakness •

Some companies have More than 1 certification

•

Some Companies have done More Projects than Innominds

Innominds Strengths •

Innominds have more Quality Partnership than all Romanian Companies

•

Innominds have more Human resource

•

More years of Experience ANALYSIS: POLAND

Poland Companies seems not that competitive in any respect. Innominds have got edge over all the companies of Poland Innominds Strengths •

Innominds have More Quality Partnership

•

Innominds have more human resources

•

Innominds have more years of experience 86

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

ANALYSIS: BALTIC STATES In Baltic States Companies have an edge over Innominds . Baltic States Companies Beats Innominds in all fields except Quality Partnership. Innominds Weakness •

Companies have More Certifications

•

Companies have done more projects than Innominds

•

Companies Have more Human Resources than Innominds

•

Companies have more years of Experience

Innominds Strengths •

Innominds have more quality certifications ANALYSIS: BELARUS

In Belarus according to the Table is less or more in the same situation as Baltic States. Innominds in this Country also leads in only Quality Partenership Innominds Weakness •

Companies have More Certifications

•

Companies have done more projects than Innominds

•

Companies Have more Human Resources than Innominds

•

Companies have more years of Experience

•

Innominds have more quality certifications

87

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

ANALYSIS: UKRAINE This the country which has got the lowest number of competitors and the only area where Ukrainian companies lead is the Year of Functioning / Experience Innominds Weakness •

Companies have more years of Experience

Innominds Strengths •

Innominds have More Quality Partnership

•

Innominds have more human resources

•

Innominds have more years of experience

88

MARKET TRENDS AND COMPETITORS ANALYSIS FOR INNOMINDS SOFTWARE

GDP (Current)

FDI(Current Inward)

HUMAN CAPITAL

VOLUME OF IT MARKET RATES

INFLATION

AIRPORTS

TELEPHONE LINES

AVERAGE POINT

RANK

COUNTRY ANALYSIS

India

1

1

1

1

1

2

1

1

1.125

1

Poland Ukraine Romania Belarus

4 6 2 3

2 3 4 8

3 2 4 5

4 2 3 5

8 2 6 3

1 8 3 7

3 2 6 5

3 2 4 5

3.5 3.375 4 5.125

2 3 4 5

Lithuania

5

7

7

7

4

5

4

6

5.625

6

Latvia Estonia

7 8

6 5

6 8

8 6

4 7

6 4

7 8

7 8

6.375 6.75

7 8

Country

TABLE – 9

As mentioned earlier in the methodology, the ratings are given to each cpuntries depending on the points received by them. Overall points and ranks are mentioned in table–2. The country with the lowest point is ranked 1 and as per the rating, India with 1.125 points is at rank 1. The last rank is given to Estonia as the worst outsourcing destination with 6.75 points. Hence from the analysis, taking 2008 as the base year. We can say that India is still the most preferred destination for IT outsourcing and their closest compititors are Poland, Ukraine and Romania with 3.5, 3.375 and 4 points and are ranked 2, 3 and 4 respectively.

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Chapter 6 CONCLUSION

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CONCLUSION Being on the Top doesn’t mean you will always be there. To maintain the Position, one should always be competitive and beware of Threats and their own weakness. India is currently a leader in IT Outsourcing. Many new countries that are emerging may be the leaders in the coming years. India is far ahead of all its competitors and will be the leader for coming few years. India has no opportunity in nearshore outsourcing; but as an offshore outsourcing Player it has enormous Potential. Culture, Language, and Distance are few points which can make india into the race with the Nearshore Destinations like Ukraine, Poland, Romania etc. of Europe. The recession has gripped the companies all over the world and the best option to reduce their functional cost is to Outsource their work, Current Situation is the best time to get the opportunities from European Providers by Offering new and better options to reduce their current functioning cost. The Biggest threats for India are the countries from Asia Pacific regions such as China, Philippines and Vietnam; From some of the reports it is clear that if India does not work on its weaknesses China, will over India. Quality and quantity of human capital well versed in both English and IT is the biggest strength of India. To continue their journey to be a leader India should emphasise on improved foreign language skills and take an extra edge over other countries who are becoming a threat for India. Stable Government, positive growth etc. show a trend that India is shining and to continue its journey it should move fast toward in grabbing the opportunities.

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BIBLIOGRAPHY

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BIBLIOGRAPHY

BOOKS

1. Malhotra, Naresh K., 2008, Marketing Research, Pearson Prentice Hall, New Delhi, 2. Hitt,Hoskisson,Ireland 2009, Management of Strategy, South Western Cenage Learning,New Delhi

RESEARCH AND ARTICLES

1. “Global Outsourcing Report”, Mark Minevich, Going Global Ventures Inc., March 2005

2. “Central & Eastern Europe IT Outsourcing Review ‘2007”, Ukraine Hi-Tech Initiative, December 2007

3. “Outsourcing Industry in Ukraine”, GOAL Europe, June 2007

4. “ Global Sourcing Trend”, Alistair Maughan (London), Julian Millstein (New York), Nigel Stamp (Hong Kong), Morrison Foerster

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WEBSITES AND ONLINE DATABASES 1. www.itonews.eu 2. www.euroitx.com 3. www.worldbank.org 4. www.unctad.org/fdistatistics 5. www.gartner.com 6. www.ceeoa.org 7. www.pri-center.com

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Appendices

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APPENDICES

FDI – Inward and Outward for European countries and India

Graph - 9

Graph indicates some countries had negative FDI. Negative FDI is often interpreted as withdrawal of investment by foreign investors from the host economy. While one can observe a negative value of FDI in such a scenario, it can also arise when: 1

Continuous losses in the Singapore affiliate leading to negative reserves

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