How do different countries approach software development outsourcing?

Two new European IT Outsourcing Intelligence Reports 2012 have just been published, this time covering Sweden and Norway.

The reports are based on the respective country-specific surveys conducted between September and October 2012 and highlight significant differences in the ways companies approach IT / software development outsourcing in these two neighboring countries:

Outsourcing destinations

it outsourcing sweden, it outsourcing norway, ito destinations scandinavia

Fig. 1: IT outsourcing destinations 2012: Sweden vs Norway

In Norway, 60% of outsourcing companies polled transfer their software development nearshore (to Central and Eastern Europe), while in Sweden the majority of companies – 80% – outsource their development onshore (within Sweden) and offshore (2+ time zones away).

Outsourcing drivers

it outsourcing drivers 2012

Fig. 2: Software Development Outsourcing Drivers 2012: Norway & Sweden

The surveys find that the key driver pushing Norwegian companies to outsource their software development is the shortage of domestic IT resources and skills, while in Sweden most of companies outsource in order to reduce operating costs (OPEX).

Outsourcing challenges

outsourcing challenges, issues in software development outsourcing

Fig. 3: IT Outsourcing Challenges 2012: Sweden & Norway

In Norway, the top three outsourcing challenges are: poor communication with service providers and their development teams, cultural difference and overheads (when the actual incurred costs exceed the contracted ones).

In Sweden, companies point to cultural difference, poor project management on provider’s side and poor quality of delivery among the top three issues of their outsourcing engagement.

Asked hypothetically where they would outsource their software development if they made such a decision in the future, 100% of Norway’s non-outsourcing companies answered with “nearshore” and almost 80% of Swedish companies answered with “onshore”.

Of the 435 Norwegian in-house software development companies almost 70% admitted planning to outsource at least some elements of their software development in 2013.

In Sweden, of 440 non-outsourcing companies 44% said they would consider / start outsourcing next year.

Norwegian and Swedish ITO Intelligence Reports are based on the responses of 1428 companies, of which 553 outsource their software development projects onshore, nearshore and/or offshore and the rest – develop their innovative solutions within own house.

The surveys have been conducted by IT Sourcing Europe in the frames of the ongoing 3d Annual European ITO research 2012.

Check the results of the Danish IT Outsourcing survey 2012 here.

Source: IT Sourcing Europe, 2012

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