IT services buyers are changing their buying requirements. Increasing demand for technologies that drive business innovation agendas, from cloud to analytics to mobile, is creating dramatic upheaval in the technology services market. One result of this, is that while organizations are looking to consolidate their supplier base in traditional service areas like applications outsourcing, buyers are looking to a broader range of providers to acquire specific expertise for these innovation-led engagements.
In light of this shifting backdrop, there is an argument that this will present opportunity to some of the so-called “alternative offshore” locations beyond India. In other words, buyers will look to other regions to try and find some of these specific skills and resources.
My recent report examined this with respect to Central and Eastern Europe (CEE).
The services market in the CEE region remains highly fragmented, with a large number of relatively small providers. However, the region does have a set of key strengths which will position it strongly in the minds of buyers as these broader technology shifts take place. In particular:
  • Aspirations of young digital natives in the region to become programmers or engineers
  • Educational systems focused on key strengths in engineering, math and science
  • Leading providers focus on high-end software engineering with expertise in agile development
  • Leading providers focus on product development services which helps differentiate from traditional IT services

As a result of these strengths, some leading providers in the region will likely become preferred partners for this next generation of business driven engagements. However, due to the fragmentation of the services market only a few providers currently have such mature capabilities. Therefore companies may well look to set up their own innovation centers in the region, to try and tap into the sophisticated talent. Regardless of whether companies look to third parties or seek to go it alone, the next few years promise to be an exciting time in CEE as these broader and fundamental technology shifts play out.