RIS Resource Information Systems Inc. on Tuesday announced the official opening of its Romanian Solutions Centre, allowing the firm to add the final offshore component to its application support and maintenance (ASM) outsourcing service offerings.
Until now, Calgary-based RIS did not have an offshore outsourcing location, said Peter Thompson, the firm’s CEO. The company said this new centre, located in Bucharest, will allow RIS to send specific, non-mission-critical projects overseas to provide further cost savings for both Canadian and U.S. clients. Projects that can be offshored will typically fall within the application enhancement, upgrade and development categories.
As part of its Smart Shore delivery model, RIS also offers on-site outsourcing, which combines clients’ internal staff with RIS’ employees for mission-critical application support that requires onsite management and end-user collaboration. “For mission critical applications we support, if they’re down for more than half and hour, that poses a risk (to the client). So we don’t want to send them offshore,” Thompson said.
Then there’s near-site outsourcing, a nearby, lower-cost alternative for clients with on-site support needs who happen to be in higher-cost regions and who want to avoid displacing existing employees. Nearshore centres in Calgary and Toronto complete the portfolio of services, providing centralized application support services while maintaining the cultural proximity and time zone compatibility required for mission-critical ASM.
“It’s very important to assign the right work and applications to the right locations,” Thompson said.
The Smart Shore delivery model is tailored specifically for the ASM market, he explained. “In application support and maintenance, it’s different — it’s totally separate from development, infrastructure and help desk. There are different methodologies, types of processes, people (and) culture,” which is why it’s not wise to immediately jump on the offshore bandwagon.
“When you pick up an application and look at it from an offsite point of view first, if it’s a mess, if it doesn’t work and users are upset and screaming every day, it’s not a candidate for offshoring,” Thompson explained, adding that part of the RIS Smart Shore methodology is to assess the viability of the project from an onsite perspective first. “Rather than moving everything offshore to save money, you have to first make sure that there is maturity in the organization (in an onsite setting). Then you can look for specific work that can move offshore.”
The four-tiered model also helps RIS customers keep in mind that savings are not only derived from the action of sending work to people who are paid lower wages. “We feel that we can get huge savings just by being disciplined,” Thompson said.
Jason Bremner, director of outsourcing services for analyst firm IDC Canada Ltd. in Toronto, said RIS is probably on the right track in terms of its delivery model. “Clients want the flexibility of having services delivered from the right location, at the right time and to the right place,” he said. “If that means some onshore, some onsite, some remote but in Canada, and some offshore, that’s great — they want that. The service provider needs to consider its ability to provide various service delivery models if it touts that it has a global model.”
The new centre will have 20 people working in it within then next six months or so, said Thompson. “We’re getting it off the ground…and getting the structure going, proving the concept. Then we’ll see the real growth happening after that.”
Citing statistics from Brainbench, a Chantilly, Va.-based online skills, aptitude and knowledge measurement solutions provider, Thompson said Romania ranks sixth in the world in the number of certified IT professionals. Its government is committed to attracting and retaining IT talent by exempting IT professionals from income tax payment, he noted.
What made Romania an attractive location for RIS is the time zone — “we do have that little bit of overlap with Europe whereas with India we’re totally opposite” — and the closer location.
“Romania is a day (away), India is two days — it’s just that much further. If you want to send over management teams, it takes double time to get [to India].”
Thompson also noted that Indian companies are “in a bit of a whirlwind right now of high turnover and a dramatic increase in wages,” while Romania, being a relatively newer location, doesn’t have those problems.
Eventually wages in Romania will go up, Thompson admitted. “We have about seven years…[before] the wages in Romania, Germany, France and the U.K will all be the same. We feel that we’re in sort of a dreamland at the moment, but it will equalize.”
The only difference is that companies have been offshoring to India for close to 15 years and it’s a well established model, whereas with Romania there is still some time before wages start going up, Thompson said.
Stephen Lepeak, a vice-president with Stamford, Conn.-based analyst firm Meta Group, said the specific location of the new outsourcing centre is not as significant as what this means for RIS in terms of business process capabilities.
“It highlights that this is not just about insource versus outsource, but about service provision becoming global,” Lepeak said.
“RIS is recognizing and building out their delivery capabilities. What is critical is their Smart process and methodology, which says ‘how do you determine where to source IT services from?’ The real issue is first ‘should I insource or outsource?’ and ‘if I do make the decision to outsource, where should I go?'”
The benefits for RIS, according to Lepeak, include “broadening its global footprint, while being able to take the time to invest in a process to help clients determine where to place their services and why.”