Advising on the commercial impact of technology and
    market changes in telecoms, software and IT services

The rise of offshore services has profound implications for anyone engaged in the markets for software, IT services and BPO. This Ovum Holway report will help you understand both the impact of offshore services and the opportunities they present, by providing:

• Analysis of the UK market for offshore services and forecasts to 2006

• Insights into the potential for offshore services across Europe

• Evaluation of the leading offshore-centric players and their strategies

• Assessment of the competitive position for software and services companies

What opportunities could offshore services provide for your business?

The offshore wave is gathering momentum. A new breed of offshore-centric competitor is winning increasing shares of software and IT services markets. Many such companies are ambitious, well-funded and no longer limited to software development – they have their sights set on large-scale project work, systems integration, BPO, and more.

Leading Indian players like Infosys, TCS and Wipro have been in the UK for some years and are already establishing themselves in Continental Europe. Meanwhile, ‘onshore’ firms are themselves moving work offshore. Some are doing so organically (e.g. IBM and Cap Gemini), others by acquisition (e.g. Logica and Xansa). Many are also realising that the offshore players can make good partners, as well as formidable competitors (witness the long-standing relationship between Capita and Mastek). So is the offshore wave really a threat, or a blessing in disguise? The Offshore Services Report 2003 provides an assessment of the current and foreseeable effects and implications of offshore services, taking the UK software and IT services market as its starting point.

Of all the markets in Europe, the UK has led the way in the penetration of offshore services and, today, most leading offshore players see the UK as their most important market opportunity outside the US. Drawing on Ovum Holway’s unrivalled understanding of the UK software and services sector, this report provides unique, in-depth analysis of the impact of the offshore phenomenon, answering key questions such as:

• How much business goes offshore today, and how is this set to grow to 2006?

• What types of work are being fulfilled offshore and how will this evolve?

• What are the implications for established IT companies’ strategies and business models?

• How does BPO fit into the offshore picture?

• Who are the leading offshore-centric players, and what are their strengths and ambitions?

And offshore players’ ambitions are leading them to look beyond the UK to other European markets. This report sets out the implications of such moves for the European software and IT services market as a whole, examining the offshore players’ strategies for Europe and the impact that they will have.

Table of Contents

A Executive summary

B Understanding the offshore phenomemon

• The many faces of offshore services

• Evolving offshore models

• Which customers are going offshore and why?

• Beyond bodyshopping: what type of work will go offshore?

• The importance of BPO

• Key (and emerging) offshore destinations

• The market impact

• How much business in the UK is going offshore?

• UK offshore services market forecasts to 2006

• Market split by key service categories

• Industry sector splits and trends

• Implications for the European market

D The industry impact

• How does offshore affect the S/ITS industry?

• What happens to pricing, staffing and service levels?

• Use of offshore by leading S/ITS players

• Partnering, JVs and M&A

• Competitive strategies for an offshore-centric market

E Key offshore players

• Analysis of the leading offshore companies in the market today

• What are their ambitions, strengths and weaknesses?

• Implications of the financial performance of offshore players

• Funding issues and share price indicators

• Rising offshore stars and companies to watch

Why you need this research

IT services and software companies

The offshore wave brings threats and opportunities. This report shows how leading software and IT services companies are using offshore strategies to reduce costs and improve competitive positioning. It also demonstrates that the offshore-centric players are becoming potent competitors in their own right. With analysis of their strengths and weaknesses, the report shows you which of them should be on the radar - as competitors and as partners. In addition, we forecast the impact of the offshore wave on your marketplace to 2006, helping you to plan which service areas and sectors are likely to ‘go offshore’. All in all, this report is essential reading for anyone planning to prosper in the evolving software and IT services industry.

BPO and business services companies

The BPO opportunity is attracting interest from a range of players - not just BPO specialists but also IT and business services firms. This report shows how offshore-centric firms too will play a significant role in this fast-growing market. Analysis covering the key offshore players – with details of their BPO ambitions (which extend well beyond cheap offshore call centres) – demonstrates the movers and shakers to look out for in this space. The market analysis and forecasts in the report also aid forward planning by quantifying the foreseeable effect of offshore services on the BPO market.

Offshore services companies

There is great, largely un-tapped opportunity in the European market for the offshore players. With its in-depth analysis and forecasts for the UK market – and the implications for wider Europe – this report provides a guide to where those opportunities lie and how they can be exploited. It shows which types of services and which vertical industries are the most fertile ground for offshore growth. With its assessments of key players in the offshore software and IT services arena, it also provides all-important insights into the strengths and strategies of your competitors and potential partners.

Investors

By impacting market dynamics, the offshore wave inevitably has an effect on the investment outlook for the software and services industry. On the one hand, offshore competition will be a factor in intensifying price pressures. Meanwhile, many established players are themselves developing offshore capabilities to try to level the playing field. This report provides an assessment of these trends so that investors can take an informed view of the players in the offshore and IT services arena.