Outsourcing in Denmark Is

By Stan Gibson  |  Posted 2006-06-12 Print this article Print

a Whole New Ball Game"> StarSoft also got the call from the Denmark offices of Computer Sciences Corp. for a project called Labka II, a software product for Danish hospitals and laboratories. Proving work with Russian outsourcers is subject to the same pitfalls as work with other providers, the Labka II project was plagued by communication problems that caused the project to fall behind. "There was an us-versus-them mentality. There was bad communication. There was no CSC presence on-site," said CSC Program Manager Alan Guthrie, in Taastrup, Denmark, who took on the assignment of setting things aright.
Guthrie established a global program office and assigned CSC staff to the development team, which swelled to 60 members. "To improve communication, we brought some StarSoft people from St. Petersburg to [Copenhagen, Denmark]. We used Skype. We established a disciplined requirements definition," he said.
Looking back, Guthrie said cultural differences were behind the delay. "Russian and European cultures are different," he said. "The Russian team will work longer hours without complaining. There is a shorter workday in Denmark. The Russian style is closer to the U.S. style. They want to overachieve. Nothings guaranteed. They want to debate. They want to understand why. They might be more compatible with an American client." Guthrie added U.K. and U.S. workers to the CSC team to help bridge the gulf. "When you spend the time to build the right relationship, its outstanding," he said. Work on specific projects, often for software products that incorporate critical intellectual property, has led some customers to engage Russian providers in BOT (build, operate, transfer) deals. Storage products vendor Isilon initially set out to establish an offshore captive operation. After trips to Russia, Ukraine and India, Isilon executives decided that working with Mirantis, a Russian service provider, was the best approach. "We were looking for a SWAT team to develop a very specific clustered storage product," said Mark Schrandt, vice president of engineering at Isilon, in Seattle. "We wanted creativity in the process. We wanted unique intellectual property, with a prenegotiated buyout option." Once initial development is complete, Isilon will bring the Mirantis team on board to work on the next version of the product in-house. "Its a good idea where intellectual property is involved," Schrandt said. "Russian companies are willing to do this in order to catch up. In India, you cant find one BOT that has worked. In India, theres too much attrition. We will save millions each year if we keep growing," Schrandt said. The difficulty an outsider faces in starting up an operation in Russia is another reason to seek out a partner. "Its hard to start off a new operation in Russia with no experience," said Dmitry Loschinin, president and CEO of Luxoft, in Moscow. Once the operation is up and running, a BOT approach can address the IP protection, Loschinin added. "One answer to the question of security is to make everyone an employee," Loschinin said. Luxoft entered into a BOT agreement with two customers and is willing to consider the same approach for others, he said. Luxoft also responds to security concerns by isolating from one another the teams working on various customer projects. In Luxofts building in Moscow, the team that is working on the Deutsche Bank project—and the IT systems they use—is kept separate from other teams. Luxoft also is willing to send large teams to work on-site at customer facilities, another approach that can enhance security. In the case of Boeing, for example, Luxoft has 150 people working at Boeings Seattle facilities. Concern about retaining IP is akin to customers concerns about vendor viability. Karl Robb, executive vice president of global operations for Epam, in Budapest, Hungary, said he is no stranger to intense customer scrutiny. "Clients want to see errors and omissions insurance and several years of audited accounts," Robb said. Robb also said BTGS work with Epam is small compared with its work with Indian outsourcers HCL and the Progeon unit of Infosys and that comparisons between Indian and Russian providers are inevitable. "BT has several thousand people in India, but we fill a niche in complex product development," he said. BTGS Pennington said his company ensures IP protection through "very strict" supplier agreements. He also said the Indian and Russian stereotypes are true, but only to a degree. "Epam will work more with a partnership. They will offer advice. Indian firms will tend not to disagree," he said, adding, "but Ive seen guys at Epam who do just what theyre told. And Indians do have onshore people who are great at being part of the team." Using Indian and Russian re-sources in a complementary fashion is key to BTGS strategy. Pennington said his companys Indian partners test the code thats produced by Epam. Said Deutsche Banks Marovitz: "For large firms, like Deutsche Bank, the key is, to use a British expression, horses for courses. Its important to think about what youre trying to get done. If its maintenance for COBOL or FORTRAN, youre better off trying to get that done in India. In Russia, developers wont be very happy to do that kind of work. In Russia, it would be better if your work were more interesting and you were trying to push the technology envelope so that people can try out new ideas." Marovitz suggested taking a portfolio approach for business continuity and disaster planning and hedging your bets on wage inflation and attrition. "Different people are better at different things. The Russians are definitely a powerful part of our strategy," he said. For reader response to this article, click here. Check out eWEEK.coms for the latest news, reviews and analysis on IT management from CIOInsight.com.

Stan Gibson is Executive Editor of eWEEK. In addition to taking part in Ziff Davis eSeminars and taking charge of special editorial projects, his columns and editorials appear regularly in both the print and online editions of eWEEK. He is chairman of eWEEK's Editorial Board, which received the 1999 Jesse H. Neal Award of the American Business Press. In ten years at eWEEK, Gibson has served eWEEK (formerly PC Week) as Executive Editor/eBiz Strategies, Deputy News Editor, Networking Editor, Assignment Editor and Department Editor. His Webcast program, 'Take Down,' appeared on Zcast.tv. He has appeared on many radio and television programs including TechTV, CNBC, PBS, WBZ-Boston, WEVD New York and New England Cable News. Gibson has appeared as keynoter at many conferences, including CAMP Expo, Society for Information Management, and the Technology Managers Forum. A 19-year veteran covering information technology, he was previously News Editor at Communications Week and was Software Editor and Systems Editor at Computerworld.

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