How SMEs are playing the offshore game

(By Anthony Miller – Friday, 1st May 2009 8:30am). Regular readers will know I write extensively about the offshore services scene and how it is affecting – both positively and negatively – the fortunes and prospects of UK-based SITS (software and IT services) players. Most of my commentary, on UKHotViews and in our subscription research notes, OffshoreViews, has been oriented towards the India-based ‘pure-plays’ – from TCS at the high end to the likes of L&T Infotech and MindTree at the ‘less high’ end – and on the offshore efforts of the major ‘onshore’ SIs, such as Logica, BT, Atos Origin and Capgemini.

But how can UK SITS SMEs play the offshore (and ‘nearshore’) game? They surely have to if they are to deliver products and services at the sorts of price points customers now expect – and make a profit! I’ve been speaking to and hearing from a number of SMEs who have already embarked on their offshore journey (such as Endava, Ffastfill and e.g. Solutions) and with the companies that have helped them get there. I will be meeting more companies during the course of the year and publishing a series of OffshoreViews notes for subscription service clients giving examples of how UK SITS SMEs are playing the offshore game.

Let me give you a taster of what I’ve found so far. SMEs going ‘offshore’ broadly fall into two camps: those that build their own ‘captives’ (by themselves, by acquisition or with ‘facilitators’); and those that partner with existing offshore services players. I met up recently with two companies that have been helping SMEs ‘go offshore’ in quite different ways.

Mumbai-based Rave Technologies, now headed in the UK by MD Melvyn Burgoyne, is an offshore software product engineering outfit who I’ve known of for some years. They’re an SME themselves (some 300 employees) and work for SITS companies around the world. Here in the UK they’ve partnered with the likes of business intelligence software firm, Inca, SaaS hospitality industry player, Fourth Hospitality, and even much larger UK-based BPO player, Xchanging.

I also met up a week or so ago with Neal Gandhi, the highly entrepreneurial Founder and CEO of QuickStart Global. I guess the best way to describe QSG is to say it’s a ‘build, operate, transfer’ player – but without the ‘operate’ bit. Some call it ‘ODC-in-a-box’ (as in Offshore Development Centre). QSG basically sets up offshore operations for companies in India (of course) but also Bulgaria, Nicaragua (!), Taiwan and Vietnam, with more destinations to come. Once the customer’s ODC is in place, QSG runs the ‘facilities’ but not the operations. A bit like Regus on steroids, I would say. QSG has done this for the likes of Intelligent Environments, Portrait Software and SFW.

With offshore product and service delivery, it’s clear that some UK SITS SMEs have truly ‘got it’ and what’s more have done something about it. The question is, what about the rest?