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November 29, 2006 we almost missed our plane to Gdansk. Because of the traffic jams and the very fact that Cologne/Bonn Airport appeared to be a bit further than we’ve thought, we arrived just in time to board the plane. Fortunately, my business partner Arie managed to convince the guy at the check-in desk that we had to catch that plane. On a wet and cold Wednesday morning we landed in Gdansk. Since that very moment it all went very fast. Time sort of hasn’t stand still since then. Goyello officially exists since that very moment, today it’s exactly 5 years. We are proudly reviewing the past years and we are eagerly looking forward to the unknown future.

The survival of the fittest?

Economically it has been five rather poor years. Sometimes it was even hard to survive. We had to work hard to acquire and then satisfy every new client. Fortunately, the past has shown us that this economic downturn had its good sides as well. In times of crisis, businesses became more cost focused but meanwhile they also realized they need to innovate to stay ahead of the competition. Outsourcing their software development enabled them to achieve both the savings and the innovations. Goyello turned out to be the right partner for many businesses.

Goyello steadily growing

Year by year, Goyello managed to grow significantly. In early 2007, we used to work in the living room, sitting at the dining table. We were regularly meeting with our team on the beach. These were good times when we could even sometimes relax. The first clients were choosing Goyello, we were growing faster than expected. Soon we had to rent a “real” office. Who would have thought, that by the end of this year we will exchange this office for a brand new one in the Gdansk based Olivia Business Centre.

Today Goyello employs around 60 employees and the number is continuously increasing. Several of our first clients, like Da Vinci International and Youropi.com, are still our partners today. We managed to build a PHP and Microsoft .NET team around the businesses of our first clients. Nowadays, we are developing most of our applications in Microsoft .NET and Java. Besides, we offer mobile application development (Android, iOS and Windows Phone). Not forgetting about our web designers, who make that every application is accessible and looks good.

Focusing on web-based business applications and e-commerce

Our focus has changed over the time. In the beginning we were mainly focusing on web site and portal development. Today, we are primarily focusing on business applications and e-commerce. The retail and logistical sectors are the areas where we are doing really well. For a couple of our clients we have developed point of sale solutions (POS), stock management, loyalty and reporting systems. Meanwhile, we have developed some solutions ourselves as well. We have successfully implemented our own 21crm a few times. Business Intelligence is becoming increasingly important and we deliver the solution together with our Gdynia (next to Gdansk) based partner.

We are really proud of the recent 21webmerce web shop and auction system implementations. We are looking forward to a successful future for those two of our best solutions.

From enthusiastic amateurs to skilled professionals

Sometimes, when looking back, we realize what amateurs we were back then. When you enter our office today, you will notice a well-tuned machine. Different teams are cooperating interactively with our clients in a professional manner. You could say we became very Agile over the past years.

Thanks to all who made this happen

We thank our current and former Goyello colleagues, clients, suppliers and especially our families for all the effort and support that made it happen. Without their contribution it would have been really hard, if not impossible, to achieve what we did. This also refers to all the encouragement and words of comfort coming from friends and acquaintances. That’s extremely motivating and inspiring!

During a webinar organised by Gobal Services analysts of advisory firm Tholons have just released this year’s Top 100 Outsourcing Cities ranking. Although the top 10 didn’t dramatically change the shift towards nearshoring is clearly noticeable. Tholons concludes the 1st position of India’s Bangalore is under pressure. Eastern Europe in general and Poland more specific are well ranked as emerging locations.

The group of top cities increased

This year’s list of Top Emerged Outsourcing Cities has expanded, identifying ten global delivery locations. Two new cities join the eight previously acclaimed outsourcing cities. Cebu City and Shanghai have significantly developed their respective outsourcing industries which have allowed these cities to join the Top 10 Emerged List.

While Bangalore retained first place for the fourth year running, Mumbai moved up to second place this year, with its huge labor pool consistently displaying enhanced service delivery in complex and high-value FAO services. During the webinar Tholons announced Bangalore will be facing severe competition in the upcoming time. A 1st rank in the next year is far from certain.

The traditional outsourcing countries are no longer alone

About 10-15 years ago US and UK based outsourcers only considered India and the Philippines to be their outsourcing destinations. Over time outsourcers have become more convenient in outsourcing and many more countries have joined. For different reasons today different locations are being considered.

Tholons has noticed more focus on near shore although being higher cost locations. This choice is being made for many different reasons like near time zone, language and cultural affinity. When it’s IT related intellectual property law is a very important decision factor.

Low cost is according to Tholons’ survey no longer the main driver. It’s even proven higher cost locations can be more effective. This changes the focus more towards cost effectiveness instead of just “low cost”.

Because of this change Tholons has decided to extend its list from 50 up to 100 cities.

But even those 100 cities don’t cover the full market. This is just showing some part of the outsourcing world. Depending on your needs there are far more good locations to be considered.

Top 10 emerged, top 50 emerging and 40 next wave cities

Tholons has divided the top 100 cities into three groups: emerged, emerging and next wave cities. The main difference between the 10 emerged and the 50 emerging cities is the scalability you can achieve. Besides there is a fourth group: “On Tholons radar” which are cities that could join the list in the upcoming time.

Three Polish cities rank on this year’s list. Kraków managed to climb 3 places and is leading the emerging group while Warsaw maintained its position among the emerging cities. Wrocław is with ranked for the 1st time. Already for some years it was “On the radar”.

Not on the list, but on the radar is Gdansk. Thanks to the huge effort of the local government Gdansk is for sure an emerging BPO and ITO city.

Eastern Europe is the leading continent

Based on the data provided by Tholons I prepared some graphs. Eastern Europe appears to be leading when you sum the number of cities by region, which proves the shift from the traditional outsourcing regions towards more nearshore outsourcing.

I realize this graph doesn’t tell us anything about the market size. Because Bangalore alone might have more turnover than Eastern Europe as a whole. And the picture changes when you sum the number of cities by country. India is leading this list with 14 cities.

Within Eastern Europe Russia and Poland are leading. Those are the biggest nearshore markets for Western-Europe and even for the US it’s becoming a more important outsourcing market. This is not expected to change although I expect Ukraine will become a good follower soon. It looks like Tholons just didn’t notice them yet.

You can download the full dataset here or read is as PDF here.

In the end you will have to decide yourself

If you are not just looking for a tremendous amount of resources most of the mentioned cities could be considered. Like Brian Tumpowsky, director sourcing and governance of the Publicis Groupe, mentioned during the webinar it’s most important to keep your outsourcing policy balanced.

What technology do you need? Will the location be able to provide it? What is your experience?

75% of the cities on the list is for most companies not feasible. Going to China could be the next step for some companies, but for most this will be years away. (Brian Tumpowsky during the webinar)

You might decide in favor of a certain destination because of:

• Typical factors (e.g. political climate, economic conditions, etc)
• Your customer requirements (e.g. time zones)
• Internal requirements (e.g. virtual vs. physical)
• Skill and capability needs
• Risk tolerance to explore less mature destinations
• Internal maturity and experience
• Availability of other provider options in the considered area
• Ability to leverage provider presence in area for internal business reasons.

Tholons’ list can support and inspire you when you consider outsourcing abroad. Just like other lists it’s just a ranking based on a group of relevant factors. All these factors will be relevant to you as well, but the weight per factor might be different for you. Therefore, based on this list you should prepare your own list. Is wish you good luck while doing this. In case you look for help feel free to contact me by filling in the contact form here. Or let’s discuss on Twitter, you will find me here.

Yesterday the Polish Investforum 2010 had its kick-off in Gdansk in the beautiful Baltic Philharmonic. Two days long representatives of governmental organizations and foreign investors are discussing the Polish potential. The main objective of the Investforum is to promote the image of Poland and present its attractiveness as the location for foreign investment. The question is whether or not they managed.

Too high expectations?

Weeks before the Forum I got invited to participate in the panel about the “Advantages and disadvantages of low-cost locations”. Honestly I was really looking forward to this debate and the whole Forum. The subject is appealing and it’s always great to discuss the Polish opportunities.

Unfortunately, the Forum setup disappointed me dramatically. As I mentioned in the introduction the Forum is about presenting Poland to foreign investors. Therefore, I don’t understand why the main part of the program was in Polish. By doing so you don’t open up to the foreigners, it’s not inviting to join the discussion. Honestly, it showed how closed Poland still is towards foreigners.

Besides most of the introductory presentations were far too boring and didn’t add anything new. Mostly they were about: “See how good we are”. The debate about “The perception of Poland in the world and the foreign investment inflows” didn’t include any foreigner. One of the panel members even mentioned he “didn’t have any idea what foreigners think about Poland”. I believe among the audience there were many people who could have told them, you could have asked, but there was no interaction with the audience.

Poland no longer an emerging nor a low-cost market

Dr. Nicholas Spiro showed the current economic divergence in Europe. One of the major conclusions related to Poland is that Poland didn’t feel the recent crisis too much because of its healthy financial system and decent policy making. In the past Poland never faced a real burst like many other emerging markets in Eastern Europe. Also for the near future this is not likely to happen. Predictions of the IMF prove that there will be a stable, healthy growth rate of 3.5 – 4% yearly. But the risk for “overheating” remains according to Dr. Spiro.

Based on the figures and the lack of the burst Dr. Spiro concluded we shouldn’t treat Poland as an emerging market. Poland acts more and more like other advanced economies in Western-Europe, fortunately lacking the financial history which (at least partly) caused the recent downturn.

During the panel discussion “Advantages and disadvantages of low-coast locations” we concluded Poland is no longer a low-cost destination. If cost is the most crucial factor then countries like Ukraine or Rumania have more competitive edge.

All present companies have chosen Poland because of its liaison role in between West and Eastern Europe, it’s stable economical and political system, integration into the European Union and the fact Poland is well connected to the rest of Europe. The lower cost compared to Western Europe are most welcome, but the availability of highly skilled professionals is for all of them the most important reason to stay in Poland.

Poland a great location to locate your business

Apart from the “commercial” talks also the experiences of analysts and foreign investors show Poland is becoming an important economy within Europe. It’s a great country to locate your business. The future basically looks bright. Hopefully the event organizers will manage to present this conclusion to the foreign investors.

Tholons will present its Top100 Outsourcing Cities Ranking and Report on November 11, 2010. I’m curious how they rank Polish cities. If you are curious as well better register for the webinar.

All forum pictures: Copyright PetersOpinion.com

Today at the 4Developers conference in Poznan, Poland, I presented the audience my concern about the existing gap in between client’s need and the reality of the software developers. For some reason we seem not to manage to understand each other well enough. Too many projects do not deliver the result the client was hoping for. Honestly, it’s no longer a question whether or not this gap has to be closed. We just have to do it to make software more successful and clients more happy. But who’s responsible to bridge the gap? In my opinion the software developers. I will try to explain why. [Picture source: Allaboutjazz.com]

Software projects fail too often

Based on many data sources and publications we can only conclude software projects “fail” too often, meaning:

• The project is not delivered on time
• The project is not delivered within budget
• The project is not offering the requested/promised functionality

A combination of the above is happening as well of course.

It’s not easy to improve but we just have to

Neither I’m going to claim I know best how to solve the issue. Honestly I’m learning every day of the mistakes we are making ourselves. As every other software company we have both successful and improvable projects.

Nor will I tell you it’s easy to bridge the gap in between clients/users and software developers. These are people with a different background, different interests and a different focus. Both communicate, think and express themselves totally differently. You could say clients are from Mars and software developers from Venus.

But one thing is for sure. We need to bridge this gap. Business will have to talk together with IT, it should neither be a continuous fight nor competition.

Are we willing to work together as partners?

To realize excellent software solutions a developer will need very well specified requests. Based on a quick poll among the audience and my own experience I conclude too often clients are just not able to really specify their needs. At least not in terms a developer will understand.

I don’t blame them because I believe it’s almost impossible to fully define your needs in such a way that everybody will understand it.

We will have to find another way of communicating the client’s needs. At it’s best developers are defining the needs together with the client. Several “best practice” or “Agile” methods are available to support this process.

It’s important that we define what the software application has to do in terms the business understands. When using Business Driven Development it would look like this:

Discussing the needs in this way will also lead to all kind of usefull user stories which will make the developers understand the needs better. Besides discussion will lead to more creative ideas! Together you can prioritize them. While prioritizing it will also become clear that currently too many useless features are being developed. By setting the right priorities together you can also safe a lot of money.

The next step would be to start prototyping. You can do this by means of wireframes, mockups, draft GUI’s etc. The aim is to show the client/user as soon as possible what it’s all going to look like. The instant user feedback will show the developers whether or not they are still on the right track. Communication is king in this phase. Developers should be willing to except changes in business priorities during the development. A user will better understand what he really needs once he sees the first prototypes and working releases.

Honestly, the method doesn’t matter, because it’s just a method. If the willingness to improve is there from both sides and when they invest time and effort in defining the project you can choose any method that suits you best. The cooperation as partners will be the biggest gain, period!

Developers will have to start this change

Developers their life will become a lot easier if they understand the client’s needs better. Therefore, they should make the first step.

And why wouldn’t you? Just imagine that you won’t have to fix “bugs” anymore and that the amount of unexpected change requests drops? How would that feel? I know it’s scary, but please just give it a try. What can you loose? Add some funk and have more fun making better solutions, may be even the best solutions.

But this doesn’t mean it will be easy. Especially when clients think in the traditional model of sending a request and agreeing about a fixed priced, fixed date project. Both sides will have to trust each other. The business has to dare to share their ideas and needs. If it’s hard for your development team to achieve this interaction with your client just start working like this yourself. One of the team members could “act” like the client. A sales person, consultant or business analyst are in general best for this job.

We try to achieve this level of trust by having many (in)formal meetings at the start of the project. Having a drink and dinner together makes you start acting different. Several workshops together show the added value of such an investment.

If we don’t change the competition will overrule us

Having a nice and relaxed 9 to 5 (or more common in Poland an 8 to 4) job you might not be willing to bother about the above. But software doesn’t stop at 4 pm. Clients are depending on software solutions 24 hours a day. And business dynamics are hard to plan.

If you are willing to support the business better this will demand an additional investment. You will have to spend time together, probably you should learn more about the business. That will take time, after hours.

But if you don’t do this, the competition is waiting. In China and India there are many young, eager and clever software developers willing to take our jobs. Today the main issue for the client will be that it’s even harder to outsource the work to these countries. But sooner or later they will find out how to use these resources if we as Polish and European developers don’t manage to seduce our clients.

It’s not about methods, but about “funky” cooperation

Hopefully I managed to show we can not solve the current situation just by implementing a new “funky” method. There are more steps needed. I will summarize them:

1. Get to know each other: Business en IT will have to invite each other to share thoughts, to understand each other
2. Trust each other: The relationship in between Business en IT will have to be based on trust
3. Stimulate creativity: Business needs should be defined together
4. Make things understandable: Business needs have to be defined in an understandable way, as “user stories”
5. Set priorities, exclude waste: The business sets the priorities for the implementation of the features
6. Interact: Development should be more iterative and interactive based on prototyping
7. Communicate: During the development we have to communicate, communicate, communicate
8. Change is the norm: Developers have to be open to changes. Business needs will change over time

The above is a rough summary of today’s presentation at 4Developers in Poznan, Poland. Feel free to check the slides. I’m looking forward to your feedback, comments and opinions below. Thanks for your attention!

After my presentation @mesirii send me the following link where Martin Fowler and Dan North discuss bridging the gap as well.

Yesterday afternoon a new Dutch client arrived in Gdańsk. Just like many others also this client didn’t know what to expect. The image Dutch people have about Poland is still not too positive, biased by the media. The advantage is that it is rather easy to surprise them. A good combination of sightseeing and a productive day made we managed to impress our client.

Today we had a kick-off for a new and challenging web security project. We had to compete before with an Indian provider to win this project. Our well designed solution, Dutch background and the fact that Poland is rather close to Holland made he chose us.

Yesterday evening we visited Sopot, this evening the Gdańsk Old Town. In this way we managed to combine productivity with fun. The picture shows Długi Targ, the main square.

Last weeks we had several clients visiting our development location in Gdańsk, Poland. As many times before they proved the importance of personal meetings within an outsourcing relationship. Apart from the intensive business talks we were having a lot of fun together. And isn’t having fun one of the most important things in life?

In reality most outsourcing relationships are either rather formal, based on strict contracts, or more like project contract based deals. The first case mostly doesn’t leave much space for intensive informal relationships, the second one very often doesn’t allow both parties to invest into the relationship. In my opinion this is a real pity.

As mentioned our GOYELLO development locations are based in Poland. For our Western European clients Poland is for many reasons a great nearshoring location. You can read that in one of my posts on our GOYELLO blog. One of the advantages is the relatively short distance. This enables us to visit our client’s at their premises and may be even more important it’s rather easy for our clients to meet with us in Gdańsk. The client’s visits in general last for several days, long intensive and productive days. They enable the client to focus on the subject, without being disturbed all the time.

Traveling to Poland also includes some ‘magic’ for most visitors. Western European people don’t know what they can expect. That’s why most of them are very surprised when they see our office, meet our people and visit the beautiful Polish cities.

Last weeks we had several visitors again, both existing and new clients. And like always we were having a great time together. During intensive discussions and workshops we defined their needs, discussed possibilities and we were testing almost finished applications. In the evening we visited both Sopot and Gdańsk. Both beautiful, impressive cities, great places to relax, have a great dinner and more important to have intensive talks to get to know eachother better. In all cases this occured to be very useful again. Even hard discussions are a lot easier when you know and really understand the other. It makes that we realize what drives and bothers them. It enables us to serve our clients better.

Besides we just had a great time! Thanks guys!

Outsourcing seems to have many advantages if you believe all the news. Being involved in many software development projects I know that potential outsourcers very often have a lot of doubts. They consider outsourcing to be a good solution for their current issues, but they have doubts whether it will not introduce new ones. Both the advantages and the doubts will be applicable in certain cases and not applicable in other’s. Instead of focussing on all the advantages, I plan to write a blog post about the doubts and how to overcome or to accept them. I invite you to share your doubts. I will mention all relevant input, including the source.

This evening I posted the above message on Twitter, which already generated a lot of useful input for my blog post. Based on my own daily experience I could try to define the list of the most common doubts, but I don’t feel confident that this list will cover all. Therefore, I would like you to share your doubts as well. Please leave them as a comment below.

A question could be why to focus on doubts. In general I am someone who looks at things from the positive side. But in this case I know that it is needed to take doubts really serious, otherwise the outsourcing will fail for sure. Doubts, whether true or not, can be a serious blocker. Not for everyone outsourcing is the right way to go.

All input will be highly appreciated and I will mention the relevant ones in my post. Please also provide your answer on the following question:

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

Today I received updated information about the Indian outsourcing market from two different sources within one hour. Too much of a coincidence. Due to the economic downturn companies in the US and the UK recently cut their IT budgets by up to 45%. Many projects have ben put on hold. Since most of the outsourcing projects in India come from the US and UK a lot of good IT people are available on the labour market today. Rates have dropped for the first time in years.

Recently I have noticed an increased activity in my mailbox related to Indian IT providers. About a year ago I started looking for a potential partner for GOYELLO. The offered rates were not that attractive at that time. Over the last few weeks I have received some better offers. But for the price alone we are not going to outsource to India of course.

Although there is a significant decrease in the IT spendings in the US and the UK, India seems to manage the downturn quite well. This is  mainly because of contract renewals and the rise of the spendings in the local market. To attract other income sources, most vendors are trying to climb the value chain by offering (business) consultancy services. Nevertheless, most IT vendors are facing the need for cost cutting. Some smaller vendors might not survive, but the main players will still exist if the market is going to improve again.

Although, this is not applicable to every vendor. Satyam,one of the biggest vendors in India announced a tremendous loss in January for the first time since the beginning of the company.

From the second half of 2009 new projects are expected to come from the US thanks to the governmental stimulus packages. Till that moment it is possible to enjoy the more attractive rates.

For further reading: PMR Report – “India – the leading destination for outsourcing IT services”

Cost reduction, lack of available resources, focus on the core competences. These are just some reasons to start considering outsourcing of IT activities. Big companies are already used to this way of working. Right now the SME market seems to be ready. On a daily basis I meet SME company owners who consider outsourcing some parts of their IT. Their motives differ, their “fear” is identical.

It has already been proven that outsourcing of IT can have many advantages. That’s why I strongly encourage everyone to go for it.  The advantages vary depending on the situation: more flexibility, continuity of supply, availability of knowledge, efficiency, productivity and cost savings. To make sure that outsourcing is successful you will have to start working in a different way. Probably you will be afraid of losing control. This does not have to be the case. But for sure you will be more relying on a third party than before.

As an outsourcing organization you will have to acquire professional knowledge about the ways of managing a third party. Believe me, this is something completely different compared with managing regular procurement contracts. The demand will change continuously. You will have to combine all the existing request from your organization. A well-thought-through functional design will be the input for your supplier.

In the beginning this will feel unnatural and complex. After some time it will lead to a more professional IT service. A clear definition from the demand side will always lead to a better result. The fact that you will cooperate with full time IT professionals will increase the quality level of the solutions. And outsourcing will lead to more cost transparency.

If you organize your outsourcing project in a proper way, there is no need to be afraid!