Outsourcing is everywhere. It has penetrated into virtually every sphere of business and much of personal life.

Whatever the general pros and cons, the most successful and rewarding form of outsourcing is transformational outsourcing involving strategic partnership. The first describes the overall outsourcing experience—it transforms the business—while the second refers to how it’s accomplished—two or more companies partner to achieve their strategic goals).

The crucial action in developing successful, long-term relationships is finding the right partner.

Here are some of the considerations that you may find useful (adapted from the Microsoft recommendations)

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What is your vision of outsourcing software development? Two companies in different parts of the world, locked in their offices and knowing each other only in the virtual world? If the answer is ‘yes’, you’ve got it right—at least in the majority of cases that’s what outsourcing is all about. Modern technology enables us to work for someone and never meet them saving on labor and traveling costs.

But that doesn’t mean it’s totally satisfying and we at NTR know that personal contacts build firmer business relationships, promote understanding and boost corporate reputation. Therefore, we’re always looking for opportunities to meet our international clients, both in Russia and abroad.

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As a top Russian outsourcer, NTR likes to track the predictions of outsourcing trends for next year. Here is what the pundits are saying about 2008.

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Outsourcing is present in virtually every business sphere: order fulfillment, accounting/billing, IT, software and hardware development, manufacturing, business processes, call center, human resources, tech support - almost anything a company chooses.

Outsourcing is thriving due to the opportunities it carries, including cost-cutting, speed, and boosting productivity. By taking advantage of the lower labor costs in various countries, companies that outsource report savings as high as 50%. Higher productivity is achieved when a company concentrates on its core strengths and utilizes outsourced experts for everything else.

Unfortunately, as with most good solutions, outsourcing has a dark side for those who use it carelessly and more and more articles are drawing attention to the fact that outsourcing is not always as profitable, easy or logical as was once proclaimed.

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The state-of-the-art technology and overall globalization have made it possible for people all over the world to join in virtual offices and build a geographically dispersed team. It comes as no surprise anymore that office workers may not appear in the office at all, and some American company outsources Russian software developers.
But does remoteness of employees make them easier to manage? Apparently, not. At least that’s what people I know are saying about it.

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According to an analysis by TPI, the worldwide outsourcing market is experiencing a slowdown, with the total value of contracts awarded in 2006 down 9% compared to previous year.

The annual figures show the total value of outsourcing deals signed in 2006 was $77.9B, compared to $85.0B in 2005.
The number of industry-wide contracts with TCV (total contract value) > $50 M awarded in 2006 is 148 in America (down 9.2% from 2005), 157 in Europe (up 10.5%), and 45% in Asia/Pacific (up 25%).

However, the trend is different when analyzing the TCV of contracts awarded: TCV is down just 2.56% in America, but down a whopping 25% in Europe, while it’s up 66.6% in Asia.

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According to an article by Wayne Rash, posted in eweek.com on June 22, 2007, "The Russian software development industry is working to move away from traditional outsourcing models, relying more on becoming partners with overseas companies and touting talent and innovation over cheap labor"… According to Valentin Makarov, president of the Russoft Association, "When you come to Russia, the question is, ‘What is your problem?’… this approach is different from that used in most of the rest of the world, where programmers simply code to a specification and provide no input into whether the specification makes sense. You create a joint team."

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This year, Accordfest was June 22 to 24. It’s a festival for music lovers who write songs and sing them, traditionally playing the guitar themselves, and who enjoy sitting by the fire singing and listening, or on a stage improvising.
This year’s event was organized by CEO and CTO of Synergo, NTR’s division in Novokuznetsk. Konstantin Davkaev and Eugeniy Danilov are not only fans of the music and the venue, but also bards, themselves!

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According to IDC’s foreign client opinion research, the major advantages for Western business in outsourcing to Russian IT companies are its high-level technical specialists, a strong cultural affinity to the West, which Indian IT often lacks, economical software development and a friendlier time differential.
Large Russian outsourcing company Russoft was sponsoring this research. Results and recommendations are summarized in a white paper available for download at www.russoft.org/downloads/IDC_research.pdf.

The authors of a recent McKinsey research suggest that the potential of outsourcing to Eastern European countries is overlooked, despite the obvious advantages: low wages, strong technical education, low risk and cultural/geographical proximity to Western Europe. However, McKinsey estimates that offshoring activity to these countries could triple in the next three years. (Outsourcing to Eastern Europe in the McKinsey Quarterly)