A Critique of the Proposed National Education Policy Reform
Case study-IT Outsourcing in Denmark
1.
2. Content
Introduction and short characteristics of Denmark
Research description and methodology
IT outsourcing : destinations, trends, challenges, problem
solving
Client – Vendor relationships
Outsourcing costs and cost effectiveness
IT outsourcing predictions for future
Conclusions
Bibliography
3. Short Characteristics of Denmark
Denmark has a number of characteristics that distinguish it from
its northern European neighbours.
It consist of 406 islands and has 7314 km of coastline.
Official currency of Denmark : Krone - Kr (Crown)
Capital : Kopenhag
Population : 5.905.500
4. Short Characteristics of Denmark
The thought that outsourcing is only for large companies has been
dispelled in Denmark since 2003.
In Denmark the current economic situation (2009) is heavily
influenced by the Global Financial Crisis. Companies seek to free or
save resources and costs by outsourcing central functions as IT,
Finance, HR and Production etc
5. Introduction
This Intelligence Report is based on the survey of the 150
Danish companies that either outsource their Software
Development / Information Technology function(s) to an
external service provider onshore (within Denmark), nearshore
(within/close to the same time zone) and/or offshore (more than
2 time zones away), or develop their software/IT solutions in-
house.
6. Research Description
The Report aims to help Danish outsourcing companies:
Get an in-depth understanding of the current IT Outsourcing demands
and trends
See what challenges are facing their market peers / competitors and
how they respond to them
Revise / improve their current IT Outsourcing engagements / business
models based on the industry best practices
The Report aims to help Danish non-outsourcing companies:
Better understand modern software development/IT costs
optimization and/or reduction strategies
See what challenges are facing the in-house software development and
how their market peers / competitors respond to them
7. Methodology
An Online Survey was undertaken between August and
December 2012, with the objective of understanding better, the
current IT outsourcing market dynamics in the European Zone
and study what are the key decision factors the buyers believe,
should be met while sourcing to an off shore IT Service provider.
The questionnaire returned 141 answers from
companies ranging from 150 IT users.
8. Danish IT Outsourcing 2012
Destinations, Trends, Challanges, and Problem Solving
What are the main reasons for your company to outsource IT activities?
0% 10% 20% 30% 40% 50% 60% 70%
Improved quality of service
Cost reduction
Lack of resources
Improved financial control
Strategic decision
Free management time
Increase flexibility
Access to specialist
9. If you do project outsourcing, what is the value of your project(s) (in €)?
0% 10% 20% 30% 40% 50% 60%
0-49K
50-199K
200-499K
and more
10. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Web & Mail Hosting
Application Hosting
IT-Security services
System / Software
Facility Management
Support / Help Desk
What are the most common and successful IT outsourcing types used by
Danish SMEs?
11. Headcounts
If you have an in-house IT team, what size it is? (Headcount)
35%
22%
10%
4%
25%
4%
1 -- 2
3 -- 5
6 -- 7
8 -- 9
10 -- 19
20 +
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Importance levels
0 20 40 60 80 100 120
Skilled labour
Cost
Security
Domain Experience
Geopolitical stability
Available Local Support
Cultural Compatibility
Infrastructure
Time Zone Proximity
Experience Across Industries
Extremely Important Very Important Important
13. Client-Vendor Relationships
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
We did online research
We asked peers for references
We were approached by ITO service provider
We released Request for proposal
We hired an outsourcing consultancy
All other responses
How companies found their current ITO partner(s)
14. What business model used in the ITO engagements?
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Fixed-price project
Dedicated/Managed/Own team
Offshore/Nearshore Dedicated Center
Joint Venture
Captive/shared Services Center
Vertual Operating Subsidiary
Build-Operate-Transfer
15. Who Hires IT Talent To Be Involved In the Outsourced Project Execution?
0% 10% 20% 30% 40% 50% 60%
Our ITO partner
Our company
Both our company and ITO partner
16. What are the services entrusted to your outsourcing provider?
51%
32%
30%
16%
15%
8%
8%
3%
2%
16%
0% 10% 20% 30% 40% 50% 60%
IT services
Accounting
Human resources management
Supply chain management
Cash management
Sales and marketing
Research and development
Treasury management
Investment management
Other
17. Actual Savings From ITO
30%
30%
18%
14%
8%
0% 5% 10% 15% 20% 25% 30% 35%
Less than 10%
10%-24%
25%-39%
40%-59%
60% and more
OUTSOURCING COST & COST EFFECTİVENESS
18.
19. Challenges of the In-House IT / Software Development
33%
28%
24%
20%
16%
16%
12%
8%
4%
4%
0% 5% 10% 15% 20% 25% 30% 35%
Improve/change software development methodology
Extend project deadlines
we do nothing
dedicate more managerial resources
adopted distributed development
we consider outsourcing our development
change business model
encourage internal staff to work overtime
hire foreign IT specialist
improve corporate training function
What are your general impression of the outsourced software development?
20. Do you plan to continue outsourcing your software development in the
next 12 to 24 months?
Yes
78%
No
22%
21. How companies rate the following factors in terms of their importance in the future
choice of IT outsourcing
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
geographical proximity
cultural proximity
language skills
political stability
economic stability
low service rates
available IT talent / resource pool
strong R&D capability
positive referencesfrom peer companies
legal system and IP protection maturity
not important somewhat important very important
IT outsourcing predictions for future
22. Conclusions
There is an increasing demand for ITO services from high-tech startups and
enterprises in the SME sector as well as diverse industry niches, both
“traditional” such as finance and construction and innovative such as digital
media, online gaming and mobile computing
In 2012, the greatest demand for the outsourcing services comes from IT
(software development) sector, followed by government and professional
services sectors.
Telecommunication companies demonstrate the smallest demand for the
external IT resources.
Web remains the most demanded area of expertise and is outsourced by more
than 70% of Danish companies.
Mobile development follows being outsourced by 40.5% of companies.
In 2012, the top three ITO destinations remain the same as in 2011
Today’s companies still outsource to reduce operating costs and access IT skills
and resources that are hard to find / costly within Denmark.
The survey results underscore that 35% of Danish outsourcers are somewhat
satisfied with their current ITO vendors and the quality of services provided.