NZ seeks outsourcing cash

New Zealand planted the flag as a destination for organisations seeking an offshore outsourcer at a key gathering in London last week.

New Zealand planted the flag as a destination for organisations seeking an offshore outsourcer at a key gathering in London last week.

Under the banner Outsource2NewZealand, a delegation of New Zealand software and services companies had a stand at a Gartner outsourcing conference attended by up to 300 representatives of UK and European end-user organisations. It was the climax of a $200,000-plus NZ Trade and Enterprise bid to help New Zealand companies grab a share of the billions UK and Europe will spend on offshore outsourcing this year.

Gartner has been the recipient of most of the NZTE cash, having conducted an assessment of New Zealand’s readiness to enter the market, summarised in a 57-page report published last November. That report, one of whose authors was UK-based Gartner analyst Ian Marriott, was largely positive, although it listed several other countries — including Brazil, Singapore and Venezuela, and several new European Union members — with similar ambitions.

Commissioning the research and renting a stand at last week’s $4000-a-head conference ensured New Zealand was name-checked as a potential outsourcing destination during presentations by Marriott and other Gartner analysts.

In an interview with Computerworld, Marriott said Outsource2NewZealand needs to quickly establish a presence in the UK as a first point of contact for organisations interested in sending work to New Zealand.

“It needs a representative here who knows the UK market and knows offshore outsourcing,” Marriott says. It will also take ongoing, long-term commitment from the government, says Marriott, who met regional development minister Jim Anderton during a visit to New Zealand as part of his research.

“Government ministers should take every opportunity to promote New Zealand’s IT capability.”

But New Zealand is comparatively late to the market, which is dominated by Indian companies estimated by Gartner to be earning about $US12 billion from provision of software development and IT services to overseas customers. The theme of the Gartner conference, however, was that the market will continue to grow at a rate of more than 30%, despite a backlash, particularly in the US, against sending IT jobs overseas.

Marriott told a conference audience that they needed to “confront that backlash” in the planning of any offshore outsourcing move. He also talked about the need to deal with “cultural differences” that would arise when working with a service provider in a foreign country. New Zealand’s close ties with the UK give it a distinct advantage when it comes to competing with other offshore outsourcers, Marriott says.

“There’s no hassle about cultural fit; it cuts out some of the ‘getting to know you’ aspects of doing a deal.”

Indeed, Marriott has been struck by the number of key people in the New Zealand IT sector who are UK-born. ITANZ executive director Jim O’Neill and president David Irving, and NZTE IT sector specialist Alan Crofts, all of whom are closely involved with Outsource2NewZealand, are from the UK.

The company headed by Irving, Synergy, can claim much of the credit for getting the ball rolling. The head of Synergy’s London office, Darren McTigue, had noted strong national presences by India and other countries at past outsourcing conferences. The idea of New Zealand doing something similar was taken to NZTE and ITANZ, and a hurried series of meetings around the country early this year drew the support — and $2000 in cash — of more than 20 software and services companies for the initiative.

Rather than attempt to compete with Indian companies on price and scale, Outsource2NewZealand is promoting itself as a clearing house for organisations in the market for “highly innovative or leading edge” development projects.

ITANZ’s O’Neill says details of how work for UK customers will be distributed among Outsource2NewZealand members remains to be worked out but Synergy’s McTigue will be the first point of contact until Outsource2NewZealand hires its own staff.

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