Daniel Naoum, co-founder of Valueshore wrote for the supplement of Daily Telegraph his best tips for IT outsourcing.

1. 12 · NOVEMBER 2010 AN INDEPENDENT SUPPLEMENT DISTRIBUTED WITHIN THE DAILY TELEGRAPH
In the past,when most people con-
sidered offshoring an IT project,
India would probably have been
top of the list. While it still re-
mains a good choice, several new
locations closer to home have
been refining their offering over
the past few years.
The boom in nearshoring has
been popular with companies that
want to cut down on the expense
of flights to distant locations and,
as they see it, reduce the risk of
placing sensitive IT projects be-
yond Europe.
Hence the trend has led to com-
panies working with outsourcers
throughout Eastern Europe where
lower wage rates and a similar
time zone are seen as major ad-
vantages. Malta is also growing in
stature in IT outsourcing thanks
to a national programme to gen-
erate more than a thousand IT
graduates every year as well as the
reputation it has earned as an on-
line gaming centre.Claudio Grech,
Chairman of the Malta Informa-
tion Technology Agency, reveals
that the islands’ government real-
ised this put it in a good position
to become a primary IT outsourc-
ing location.
“As you’d imagine, the online
gaming companies that have set
up in Malta need a very robust IT
infrastructure so they can keep
running 24/7,” he says.
“So we have developed a very
good infrastructure and realised
that we could extend this to offer
international clients IT outsourc-
ing. To make sure we were ready
for this, we boosted our invest-
ment in IT in schools, further ed-
ucation colleges and our universi-
ty to ensure we keep on producing
the bright graduates the IT out-
sourcing industry requires.”
EU law applies
When considering nearshoring
IT projects the advice from con-
sultants will generally be to en-
sure that a location’s legal system
is robust and, preferably, that the
country is an EU member where
labour and contract laws will be
standardised.
Grech further adds that,certainly
in Malta’s relationship with Britain,
a shared culture can be of benefit.
“English is an official govern-
ment language here,after Maltese,
and it’s the language of business
throughout the islands,” he says.
“We think a shared language
is helpful but also we used to be a
British colony and so there are very
strong links with the British. It’s
placed us in a good position because
it meant that our laws and finan-
cial systems were built on the Brit-
ishmodelandalthoughthey’venow
had to alter slightlyto fit inwith our
EU membership, there’s still that
similarityand common heritage.”
Data protection rules are another
major driver in companies choos-
ing to nearshore IT projects with-
in the EU because by keeping sensi-
tive data within the common mar-
ket, enterprises can avoid potential
privacyproblems.
EU options grow
for IT outsourcing
SEAN HARGRAVE
info.uk@mediaplanet.com
Question: Are there
complementary or alternative
locations to offshoring IT
projects?
Answer: Nearshoring is
proving popular for clients
wanting projects to remain within
the EU
NEWS
LOOK CLOSE
TO HOME
4
TIP
FACTS
Public sector cuts looks set to
encourage shared services. Bed-
fordshire and Hertfordshire police
forces are leading the way by com-
bining IT teams to save £350,000 per
year and possibly as much as £1.7m
over the next five years.
The AT Kearney Global Serv-
ices Location Index for 2009 found
that the Czech Republic, Poland and
Hungary had all slipped down its
rankings due to higher costs. How-
ever, the legal attraction of keeping
EU work within the EU was not con-
sidered within the judging criteria
which named India, China and Ma-
laysia as the top three countries.
A survey by accountants, BDO,
makes grim reading for outsources
hoping to attract inward investment.
Only 5 per cent of executives from
10 countries said the UK would be
a target for international expansion,
compared to 32 per cent for China
and 20per cent for India.
Look at all costs
1
Thereisoftentoomuchfocus
on day rates rather than the
overall cost of outsourcing. The
hidden costs associated with trav-
elling to sites and management
time out the office dealing with
project complications,as far afield
as India and China, can often ne-
gate the perceived original cost
savings.
Consider times zones
2
Many businesses are finding
that outsourcing to a differ-
ent time zone is disruptive.If mis-
takes are made it can take 24 hours
torectifythem.Nearshoringcloser
to home means that any problems
can be dealt with face-to-face or
over the phone on the day, if re-
quired.
Think ahead
3
India has lost its shine due
to rising attrition,wage in-
flation and skills shortages.This
has resulted in a dip in quality
because of staff churn, less sen-
iority and difficulties in commu-
nication. Businesses need to en-
sure that whatever region they
outsource to,does offer them the
quality and scalability they
require.
Review labour flexibility
4
Nearshoring within the EU
means there are no delays in
waiting for visas for staff mem-
bers to work in EU countries.
MY BEST TIPS
5
Daniel Naoum
co-founder of Valueshore
NOT JUST A
BEAUTIFUL PLACE
Malta is growing in
stature in IT outsourcing
thanks to it’s programme
to generate more IT
graduates
PHOTO: ANYAIVANOVA/
SHUTTERSTOCK