- Web start-ups generate fast return – Collins (03 March 2010, Business and Leadership)
- Open-source hardware takes steps toward gadget mainstream (04 March 2010, CIO)
- Cloud Computing’s Three Revolutions: Part 3 (04 March 2010, CIO)
- Dublin gets ready for European City of Science 2012 (04 March 2010, Business and Leadership)
- Romania rises as outsourcing target (05 March 2010, The Diplomat)
- Improve productivity with Agile Scrum development (03 March 2010, CIOL)
- Swedish Appetite for Outsourcing Doubles (02 March 2010, Waters News)
- CeBIT 2011: Neues Konzept (08 March 2010, Silicon)
- IT-Recht 2010: Worauf sich Unternehmen gefasst machen müssen (03 March 2010, Manager Magazin)
- IT-Industrialisierung bei Banken: An SOA führt kein Weg vorbei (03 March 2010, CIO)
- Software für den Aufschwung (03 March 2010, FTD)

- The business value of Information Security (23 February 2010, CIOL)
- Facebook deemed world’s most innovative company (23 February 2010, Business and Leadership)
- 3 tools to improve collaboration in your company (24 February 2010, Infoworld)
- Compliance Under a Cloud (25 February 2010, CIO)
- Cloud computing and its relevance in India (25 February 2010, CIOL)
- Recession shifts IT service management into fast lane (25 February 2010, Computerworld)
- Study: Most multinational companies use IT outsourcing (25 February 2010, IT World Canada)
- Offshoring: Should the government send IT work abroad? (24 February 2010, Silicon)
- Computerwoche-Anwenderstudie Teil 1: So planen IT-Entscheider 2010 (01 March 2010, Computerwoche)
- Deloitte-Studie: Was IT-Dienstleister gegen Umsatzeinbrüche tun (24 February 2010, CIO)
- CeBIT 2010: Was dieses Jahr alles anders werden soll (22 February 2010, ZDNet)

Britain’s debt set to be higher than that of Greece (19 February 2010, Telegraph)
- Staples Turns Out an IT Outsourcing Option for Small Businesses (19 February 2010, CIO)
- Europeans Prefer Staff Suppliers to Outsourcers: Forrester (19 February 2010, CIO)
- Europe a growth market for outsourcing (16 February 2010, The Hindu)
- Facebook to launch ‘Zero’ version for mobile phones (17 February 2010, Yahoo News)
- The painful truth about age discrimination in tech (17 February 2010, Infoworld)
- VC investors see potential in Irish software sector (18 February 2010, Business and Leadership)
- IT groups warn Chinese on regulation (21 February 2010, Financial Times)
- IT-Abteilungen geht das Geld aus (22 February 2010, Financial Times)
- “Open Source BI ändert den Markt” (19 February 2010, Silicon)
- CeBIT: Haus der Nationen wird zum CIO-Treffpunkt (18 February 2010, Silicon)
- IT-Fehler verursachen Milliardenkosten (16 February 2010, CIO)

-

- IT spending in western Europe to reach US$68.6bn (09 February 2010, Business and Leadership)
- IT Outsourcing: Why It Pays to Appraise Your Contract (09 February 2010, CIO)
- Global IT industry to return to growth this year (09 February 2010, Computing)
- Japan remains world’s No 2 economy (15 February 2010, Business and Leadership)
- Silicon Valley limps as India dashes ahead (12 February 2010, CIOL)
- What matters for the IT industry in 2010? (12 February 2010, Computer Weekly)
- Indian IT firms turn to Latin America: WSJ (11 February 2010, CIOL)
- Offshoring Research and Development set for growth (10 February 2010, Offshoring Times)
- Der Open-Source-Fahrplan für die CeBIT (12 February 2010, Silicon)
- IT-Branche wieder optimistisch (12 February 2010, CRN)
- Der deutsche IT-Markt erholt sich langsam (10 February 2010, CIO)

- IT industry fights tax changes (02 February 2010, Misaustralia)
- India Telecom outlook for 2010 is stable to negative (02 February 2010, CIOL)
- Asset Protection Offshore! (03 February 2010, PR Inside)
- Cairo ICT to reflect dynamism of the IT sector (08 February 2010, Yahoo News)
- IT recovery on, India ranks high (03 February 2010, Yahoo News)
- How will the Carbon Reduction Committment affect IT outsourcing? (03 February 2010, Computerweekly)
- IT Outsourcing: Why It Pays to Appraise Your Contract (03 February 2010, CIO)
- 10 best IT jobs right now: Source: The Industry Standard (02 February 2010, The Standard)
- Rumänien: Der Lockruf des Karpaten-Goldes (03 February 2010, Die Presse)
- Russland nach der Krise: Wütende Bürger trotz Wirtschaftsaufschwung (02 February 2010, Handelsblatt)
- Europäischer Outsourcing-Markt stark gewachsen (05 February 2010, Inside IT)
- Deutsche Sprache – schwere Sprache: Neulich in …Bangalore (03 February 2010, Computerwoche)

- Deloitte outlines priorities for CIOs in year ahead (26 January 2010, Computing)
- Economic rebound will drive demand for ICT (28 January 2010, Voice and Data)
- No slowdown for IT jobs: Candle ICT (1 February 2010, itnews)
- A Big Year for ‘Socialytic’ Applications? (29 January 2010, CIO)
- Is 2010 the year of location-based services? (29 January 2010, CIO)
- Moldova: A Corner of Potential in Europe (27 January 2010, BusinessWeek)
- Predicting the role of outsourcing in 2010 (26 January 2010, Financial Director)
- Can outsourcing and cloud save stretched IT departments? (25 January 2010, Silicon.com)
- Moving forward in OpenSource (25 January 2010, CIOL)
- Messemacher diskutieren Perspektiven von CeBIT & Co (1 February 2010, Computerwoche)
- Energieverbrauch, Outsourcing: Gartner blickt in die IT-Glaskugel (29 January 2010, CIO)
- Forrester-Ranking: Deutscher IT-Markt legt 2010 um elf Prozent zu (29 January 2010, CIO)
- Die Hälfte der Schweizer Firmen nutzt SaaS (29 January 2010, Swiss IT Magazine)

Pentalog is now working in 5 countries, which have different levels of practices and types of wage scales. Thus, in addition to the question of salaries, there is a genuine “large difference” between the gross annual salary in France and the salary in Vietnam which is very complex, incorporating a premium (bonus) of the New Year, which can change the monthly salary, from 1 to 3 or 4 times because of the additional earnings.

In Romania and Moldova, with patience, we succeeded, like most businesses, to impose a contractual gross wage scale. The constant changes of taxes and social charges have condemned our ability to establish fixed net wage scales.

The average remuneration scale in these 5 countries are very different, we should not hide this fact. A German company will pay a higher gross salary than that of a French company… but the net earnings are very similar, because of the impressive tax system in Germany. The Romanian wage scale varies greatly from what is established in the capital, to the different parts of the country, also if the employee has a specialty occupation or exceptional training using a specialty tool or program, if he is a junior or senior, and or if he acts as a consultant or is an “in house” employee. Thus, a BO developer in Bucharest, familiar with a leading business sector and after 7 to 8 years of experience will have a gross salary which would astonish a recruiter in Paris. I think I can say, in this case, the senior employee, working in direct interaction with customers, will reach a high pay scale equivalent to those of a provincial French city and often, could even reach the equivalent salary of Paris. In contrast, an unexperienced tester in a provincial town in Romania will make 10 to 15 times less. In Romania, in terms of what is happening in most other offshore countries there is this amazing difference between junior and senior employees, who are not in France, land of the minimum wages which have been contractually established. Thus, a German novice will often be paid less than his French counterpart, but his earnings will grow faster.

Furthermore, depending on the maturity of the IT market of each country, inflation operates differently. The offshore business may be defined as the science of differences, the companies most confident of their production model and project management are going to target these countries where new companies are coming into this sector and who will try to make rapid productivity gains. After an investment period of one or two years, they will seek to achieve the highest profitability. The consequence is obviously that the growth earning rate, will reach higher levels of profitability much faster than in countries with a high degree of maturity and where productivity gains are lower. For example, Pentalog knew very well, when it established itself in Vietnam that the wages would grow a little quicker than in Romania and even in Moldova. In contrast, as Vietnam “grew” very quickly, the interest in this country became more important in the minds of IT decision makers. The risk appears when, for marketing reasons (Romania during 2005-2007), or demographic (Ukraine-Moldova at the present time – emigration of the workforce), wages increase without being compensated with an increase in productivity.

This article is meant to reflect on the complex strategy phases of our company and in determining its fiscal policy. The crisis has shown us in 2009, with our 50% organic growth and our profitability in double digits, that Pentalog has made the right decisions. A profitable business is able to invest in its growth, in productivity gains and market share, when most others are in recession… which, in a service industry, often results in large economic losses and therefore, in productivity.

Pentalog can not build a unique wage budget model. However, we should seek to get closer to it, to facilitate the movement and adjustments in a group of soon to be 500 people. The concept of remuneration based on productivity and employee satisfaction should be the same everywhere. It remains to better integrate the issue of the Tet (New Year) in Vietnam, not to disqualify it but to integrate it into the Pentalog production card. Indeed, if we apply the same rules in other countries, by adding this supplementary payment this may force us out of a hyper competitive market.

So when my production management in preparing the Business Model for this year, asks me how much the salaries can evolve, I am particularly embarrassed. The future remains very uncertain. Recovery or no recovery? I have always believed in a quick recovery. But where are we in this first step to recovery? I feel the need to improve wages in countries where we are already established. But we must also continue to make good profits in order to invest in our business model, continuing to conduct more training, to seek better productivity gains above the average. Thus we can be more aggressive and continue to win more projects than the competition. The group’s growth has been the engine for everyone, in generating job opportunities. How many Pentalog employees have become executives within the group? How many, in offshore countries, are earning more than 1000 € (over $ 1450)? How many, in these same countries, earn over 2000 €? What does it matter to see wages rise by 20% when it comes to achieving a strong financial personal growth? To increase the salary of an employee when he confirms by his work and his intentions are to become an important element in our company?

I am going to answer the question that was asked of me. With several figures depending on the country. But more than ever, I believe in the remuneration by the effort of everyone who works for the survival and stability of the group and international social community that we comprise. This is the fairest way and most beneficial to everyone and this is ultimately the only common rule that we should adopt.

- IT to go outside IT department, says Gartner (18 January 2010, Computing)
- Europeans say “ditch Internet Explorer” (18 January 2010, Computing)
- Internet video and Apps on TV soon (19 January 2010, CIOL)
- Open source under threat from ‘grey’ IP laws (21 January 2010, CIO)
- IT management shake-ups sweep finance sector (20 January 2010, Computing)
- Global IT industry to return to growth in 2010 (21 January 2010, Computing)
- The Future of IT Application Architectures (22 January 2010, CIO)
- Outsourcing: Crippling Mistakes IT Departments Make (25 January 2010, CIO)
- India’s top outsourcing companies hiring and increasing wages (21 January 2010, Monterey Herald)
- US Universities increase interest in outsourcing (19 January 2010, Sourcing Focus)
- Nielsen-Zahlen: Werbung im Internet nimmt kräftig zu (19 January 2010, Computerwoche)
- Der lange Weg zum Komplettanbieter: Kampf der IT-Titanen (25 January 2010, Computerwoche)
- Was CIOs vor Cloud Computing abschreckt (22 January 2010, CIO)
- Arbeitsmarkt: Krise erwischt auch Informatikabsolventen (22 January 2010, Computerwoche)
- “2010 wird kein einfaches Jahr für uns” (19 January 2010, Silicon)
- CH-Unternehmen nutzen Social Media kaum (19 January 2010, Swiss IT Magazine)

Alex and I are on our way to Perm, at the foot of the Urals. Why?

Without saying too much for the moment, we entered into a relationship, a few months ago with several companies established in the ERP sector in several regions of the planet. Pentalog is not really inclined to develop its own department in this sector, relations with the editor is generally restrictive and very slow to build. However, considering our current size, and for our future, we must be increasingly able to answer all the queries of our customers. Thus possibly it is necessary to consider tightening our relations with suppliers. ERP is a sector in which Pentalog has not yet filled and possibly should be considered.

Moreover, this type of service is often synonymous with higher tariffs, often misunderstood by the customers. Thus wages in France, but also in Romania, India… for these skills go beyond the logic of these various local markets. To go so far into such an unexpected region also is for us a way to compensate the exaggeration of this market. Is this a good calculation? We shall see. For now, the idea of working with a few French or German consultants, working on the front line and completed with our new Russian friends seems interesting and the motivation of a partnership seems very strong. We are entering into the operational phase of the process.

- Cloud Computing: IT Operations Changes Are Mandatory (12 January 2010, CIO)
- IDC Telco Predictions 2010 (13 January 2010, Computerworld)
- Is the tech spending downturn over? (12 January 2010, InfoWorld)
- Outsourcing Advisors: 6 Tips for Selecting Right One (14 January 2010, CIO)
- 20% of Businesses Will Get Rid of All IT Assets As They Move to Cloud, Gartner Predicts (13 January 2010, CIO)
- IT budget cuts expected in 2010 (12 January 2010, Computer Weekly)
- Mitarbeiter deutscher Unternehmen haben europaweit die meisten Geschäftskontakte ins Ausland (15 January 2010, Computer Reseller News)
- Outsourcing-Deals 2009:Outsourcing-Ranking wankt (18 January 2010, CIO)
- IT-Branche überrascht die Börse (15 January 2010, Handelsblatt)
- CeBIT: Was erwartet die ITK-Welt (14 January 2010, Silicon)
- Gartner: Handys überholen Computer bis 2013 beim Internetzugang (14 January 2010, ZDNet)
- Warum Unternehmen twittern müssen (14 January 2010, Handelsblatt)
- Wie Outsourcing von Software-Tests funktioniert (13 January 2010, CIO)
- IT und Telekommunikations- Trends 2010 (13 January 2010, Bitkom)

The moving season of Branch offices has finished with the branch office in Iasi (Romania). Since Friday 08/01 (a bit before), everyone was ready to move into the Tudor Office Center. In one of my last posts I described moving the office in Hanoi; I quantified our relocations to 3 branches over the past 15 months. We have just completed a successful 4th move in 16 months.

Over the past 14 months in the previous premises, the growth of the branch permitted us to occupy space for 40 + people. Now it has been necessary to provide for larger premises to keep up with the branch growth. The Tudor Office Center quickly became our choice in relation to its quality according to our usual selection criteria (power, generator, location, Internet operators…). Besides its remarkable appearance which can be distinguished easily from the plane upon arrival at the airport (first time in the history of Pentalog branches). What we have lost in the view of the city (we probably had the best), we have gained in luminosity.

For the arrangement of these premises, it was the first time we called upon an architect. For 760 m² of overall space, we got an original proposal, different from a traditional division. The specifications consisted of the following: 2 adjoining and communicating meeting rooms, 2 discussion rooms (small meeting room), vast space-friendly open spaces for production, but yet separated. We were not disappointed with the results. After some adjustments, we got what we wanted for the moderate budget that we had provided for:

- The office design allows for the distribution of the workplace for up to 120 people in a friendly and modern arrangement.
- The 2 meeting rooms communicate, allowing for a larger space by simply pushing back the partition-walls.
- The discussion rooms are used for privacy for one to three people for discussions, follow-up meetings or phone calls.
- A designed floor (provided for upon construction) which provides great flexibility in organizing the offices spaces.
- The production areas are not completely segregated. They are segmented into work areas for 15 to 30 people.
- Even if the spaces are open, the temperature control system shows its effectiveness in the management of the work areas.
- User-friendliness was not ruled out with a reception area and a spacious kitchen sitting 15 people.
- In regards to IT there is a server room. The building is equipped with optical fiber by national operators who give each a connection of 50 Mbps.

It is also clear that our landlord is unusual in a country like Romania. He understood that his first priority was not to make us cough up a lot of money but rather to establish a relationship of trust and add value to his property.

The move was completed without difficulty and without damage. It must be said that it was assured by the super motivated employees of the branch and some of them had already participated in the previous move. The objective therefore was known to all: Production must continue Monday morning! The maturity level has increased. In addition, the team preparing the move under the supervision of Gregory [Constantin, Sebastian, Cosmina] did a very good job. This move started with the lowest risk ever in terms of the IT elements. Saturday at 12 am, the former office was empty. At 3 pm, everything was in place in the new-one. I would like to thank all those who participated in this successful move.

I would like to go back to the designed floor. The gain in flexibility is not immaterial. It also reduced the budget for wiring to around 4k euros. We will need to study whether the gain in flexibility and in the wiring and speed of implementation will not make this kind of floor a must-have in our next branches.

Several factors are at the origin of the low level of risk at the beginning of this move:

- We have internalized many services in 2009 which gave us greater autonomy than before: Management of the Level 3 network, Centrex. It had been systematically in changing the IP addresses (level 3) and the migration of the Centrex that deployment has not been realized on time.

- The move was anticipated so that we were able to negotiate costs and manage the unexpected. We realize that this cannot be done systematically.

Here is a quick video presentation of the branch. A further video commentary will be prepared in the coming days which will be given by the Branch director, Gregory.

Currently, there are no plans for further moves or openings in the first quarter of 2010. But things change quickly and we will adapt quickly.

- 2010 tech forecasts: What the accurate analysts predict (05 January 2010, Infoworld)
- Global outsourcing: IT service providers will reach for the cloud in 2010 (06 January 2010, CIO)
- Russian Recovery! Pausing to Examine Indicators (06 January2010, Pravda)
- IT Outsourcing: Avoid Multi-Sourcing’s Costly Trap (07 January 2010, CIO)
- Firms under pressure from software audits (08 January 2010, IT News)
- Cost Saving for IT Infrastructure Management (11 January 2010, CIO)
- China’s Economy Facing Risks, Warn Officials (05 January 2010, Business Week)
- Wall Street Beat: Year Starts on Optimistic Note for IT (07 January 2010, CIO)
- Outsourcing vendors ‘will use IT to innovate’ (08 January 2010, BCS)
- Wo die Analysten irrten: Die 3 Forrester-Sicherheitstrends 2010 (11 January 2010, CIO)
- Hightech-Industrie 2010 auf Wachstumskurs (05 January 2010, Silicon)
- Frankreich: 60 Millionen Euro für die Online-Presse (05 January 2010, Heise)

- Facebook,Twitter to be platforms of choice for hackers (29 December 2009, CIOL)
- Twitter buys into geolocation (30 December 2009, IT News)
- 10 predictions for video conferencing solutions in 2010 (04 January 2010)
- Emerging markets and recession: Counting their blessings (30 December 2009, The Economist)
- Five technology trends for 2010 (30 December 2009, CIOL)
- Was soziale Netzwerke über uns verraten (28 December 2009, Handelsblatt)
- Die 7 Outsourcing Todsünden (29 December 2009, CIO)
- Die Treiber des IT-Markts: Mehr Übernahmen von IT-Dienstleistern (04 January 2010, CIO)
- Frankreich: Umstrittenes Filesharing-Gesetz in Kraft (04 January 2010, Computerwoche)
- IT-Projekte neu ausrichten: 7 Erwartungen des Managements an die IT (05 January 2010, CIO)

- 10 Outsourcing Trends to Watch in 2010 (17 December 2009, Outsourcing Russia)
- 6 Offshore Outsourcing Hot Spots for 2010 (22 December 2009, CIO)
- Tunisian economy resists world financial and economic crisis (26 December 2009, Tunis-Afrique Presse)
- India helps Mongolia in IT outsourcing (28 December 2009, CIOL)
- Five big questions about cloud computing (22 December 2009, InfoWorld)
- Today Linux is no more an option, it is a necessity (24 December 2009, CIOL)
- The top underreported tech stories of 2009 (28 December 2009, InfoWorld)
- IT-Krise war gar nicht so schlimm (22 December 2009, Netzeitung)
- Datensicherheit, Nutzen, Offhoring: Outsourcing-Projekte in Deutschland (22 December 2009, CIO)
- Deutsche und Inder forschen zusammen (23 December 2009, Silicon)
- Offshoring soll wachsen: Die Outsourcing-Trends 2010 (23 December 2009, CIO)
- Ausblick 2010: neue Chancen und Aufgaben der IT (28 December 2009, ZDNet)

- What CIOs Get Wrong About Emerging Technology (18 December 2009, CIO)
- Sun Microsystems unveils advanced cloud security tools (18 December 2009, CIOL)
- While Twitter gets the press, Germany is now a Facebook stronghold (17 December 2009, Techcrunch)
- Q&A: IDC Forecast for Management 2009 (17 December 2009, CIO)
- How Open-Source Software Can Affect A Company’s Value (17 December 2009, CIO)
- UK aerospace outsourcing (14 December 2009, The Manufacturer)
- Mittelstands-IT: Vom Unterstützer zum Gestalter (15 December 2009, Silicon)
- Lünendonk: Dienstleistungen werden immer komplexer (17 December 2009, Silicon)
- Twitter spricht jetzt auch Deutsch (17 December 2009, Computerwoche)
- Währungen: Das Vertrauen in den Euro bröckelt (18 December 2009, Welt)

- Google Takes Search Real-Time (07 December 2009, Technology Review)
- The hidden costs of identity theft (07 December 2009, CNN)
- Cloud computing, virtualization, open source poised for big gains (09 December 2009, Infoworld)
- Outsourcing Prices Likely to Drop in 2010, But at What Cost? (10 December 2009, CIO)
- How to Improve Your IT Planning in 2010 (08 December 2009, CIO)
- 10 predictions for 2010 (11 December 2009, CIO)
- IT Is The New Normal: McKinsey Survey Results (09 December 2009, Forbes)
- ICT services show signs of recovery (11 December 2009, CIOL)
- Europa-Studie: Deutsche IT-Dienstleister haben Entwicklung verschlafen (08 December 2009, Computerwoche)
- Business Intelligence: Sechs Thesen zum deutschen BI-Markt (10 December 2009, CIO)
- IT wird wichtiger (14 December 2009, Silicon)

During my trip to Hanoi, to set up with Iulia a development team for the ISD, I took the opportunity to visit a new “open”� Datacenter. As I explained in a previous post, our network strategy is to deploy a regional strategic point in an open Datacenter to have greater flexibility.

Indeed, we have to consider that a growing branch will expand every 12 to 16 months. This expansion implies moving. If we were obliged to move systematically the international links, it would increase significantly the budget of the expansion. The strategy is to “freeze” the international linkages that allow us to control our quality service throughout. Then, the links between the data center and regional branches are more accessible and less expensive to move.

In preparation for a potential opening of a second branch in Vietnam (Da Nang, Hue or Ho Chi Minh City) I went to visit this Datacenter on the outskirts of Hanoi and close to our branch office. I have already had the opportunity to visit several data centers in France and Romania. But I confess that I was impressed by the level of this one:

- External and internal access control 24H/day
- Video surveillance circuit of 70 cameras
- Double power supply but only one national provider
- Double generator set with 72 hours of autonomy
- Double UPS circuit with 20 min of autonomy
- Operator hosting room (currently 6)
- Bay hosting space of 500 m²
- Additional services: data recovery room, rollout room…

I was very impressed by the services made redundant, as well as the environmental quality and technical skills of the interlocutors. There are not many hosting possibilities available at this level in Hanoi, certainly a bit more in Ho Chi Minh City.

The strength of this type of this hosting service is the presence of many operators who will be able to ensure the necessary interconnections. For that provider it is still low. Most rely mostly on the capacity of NTT (the historical Japanese operator) who have invested also in the Datacenter sector.

Our project is progressing. It will be achieved when we have completed our search for international operators and we have sufficient bandwidth for our services. We also need to negotiate the best rates possible and therefore we are playing the game of competition between the different operators.

Prices are changing rapidly. We are presently negotiating with our two current operators to double our bandwidth for the same rate.

- Global IT spending to rise in 2010: Gartner (04 December 2009, CRN)
- IT Outsourcing: Legal Mistakes That Can Cost You Big (03 December 2009, CIO)
- Why Benchmarking Cloud vs. Current IT Costs is So Hard (03 December 2009, CIO)
- Twitter Alternatives That Are All Business (04 December 2009, CIO)
- What to consider before outsourcing functions (01 December 2009, Business Africa)
- IT infrastructure outsourcing on the rise (06 December 2009, Offshoring Times)
- Defizitsünder: Deutschland und Frankreich bekommen Frist bis 2013 (02 December 2009, Handelsblatt)
- Hightech-Branche blickt optimistisch ins nächste Jahr (02 December 2009, ZDNet.de)
- Gartner-Markttrends 2009: Die gefragtesten SaaS-Angebote (04 December 2009, CIO)
- Software-Entwicklung: Agile Industrialisierung (04 December 2009, Silicon.de)

- Orange, Twitter sign European partnership – tweets by SMS just the start, Twitter on TV could follow (17 November 2009, Techcrunch)
- Bharti Airtel launches far-east connect network (17 November 2009, CIOL)
- Burda buys 25% stake in XING (18 November 2009, Techcrunch)
- Social network sites criticized on bullying (18 November 2009, CNN)
- The Next War Over IT (16 November 2009, Forbes)
- CIOs fear mass IT exodus following economic recovery (18 November 2009, Computerworld)
- Cost-Saving Secrets of the Outsourcing Insiders (18 November2009, Computerworld)
- Billiganbieter in der Kritik: Unzufriedene Kunden setzen Offshorern zu (19 November 2009, Computerwoche)
- Zukunft der IT: Alles Service – oder was? (19 November 2009, Computerwoche)

- inCode’s Top 10 Telecom predictions for 2010 (10 november 2009, CIOL)
- Xing grows revenue while profit falls – and no LinkedIn takeover likely (13 november 2009, Techcrunch)
- What Matters Most in Outsourcing: Outcomes vs. Tasks (16 november 2009, CIO)
- Why are Indian outsourcing companies such bashful suitors? (6 november 2009, Silicon)
- The Global Innovation Migration (9 november 2009, Business Week)
- Outsourcing on the rise (10 november 2009, Global Times)
- Europäische ITK-Markt blickt optimistisch in die Zukunft (9 november 2009, Silicon.de)
- Europas 100 größte Softwarefirmen (10 november 2009, ZDNet.de)
- Outsourcing: Deutsche Konzerne lockt die Ferne (11 november 2009, Silicon.de)
- Mieten statt Leasen, Outsourcing statt Eigenleistung: Warum klassische TK-Anlagen out sind (16 november 2009, Computerwoche)

- The Other Side Of Outsourcing (02 novembere 2009, Forbes)
- Technology doesn’t isolate people: U.S. study The survey was sparked by a 2006 study (06 november 2009, CIOL)
- Industry to develop cloud computing code of conduct (04 november 2009, itnews)
- Indian outsourcing companies eyes Latin America (04 november 2009, Offshoring Times)
- The next step for Twitter Lists — Entire countries (4 november 2009, Techcrunch)
- Anwender kennen ihre Sourcing-Kosten nicht (02 november 2009, computerwoche)
- Outsourcing-Umsätze in Europa fast halbiert (02 november 2009, CIO)
- Wie sieht die IT nach der Krise aus? (02 november 2009, computerwoche)
- IT-Nachwuchs will weg aus Deutschland (05 november 2009, CIO)

Friday October 30, 2009, I attended the 10th anniversary ceremony of PFIEV (Engineering Training Program of Excellence in Vietnam) in a large hotel in Hanoi with Tuan (branch office manager) and Kim-Anh (the local representative of People Centric).

For those who are unfamiliar with PFIEV, it is an engineering program with a 5 year cycle which has a very high level of recruitment. The program had been funded for the first 5 years by the French Ministry of Foreign Affairs. Today, the Vietnamese government has taken over the funding of this program. The goal is clear: we must train our leaders of tomorrow! Graduates are recognized worldwide, as the program is recognized by the CTI (a French independent body involved in he evaluation and accreditation of higher education institutions in the fields of engineering, computer science, applied mathematics, project management, etc. The CTI is a member of the European Association for Quality Assurance in Higher Education). A few figures concerning PFIEV:

• 14 main areas of study: Aeronautics, Electronics, Energy, Industrial Computer Technology, Telecommunications, Advanced Materials, Mechatronics, Automated production, Transport Infrastructure, Urban Engineering, Hydraulic Engineering.
• 4 large French schools also contribute to the program
• 3 locations: Hanoi, Danang and HCM
• 3000 students
• 1200 Graduates
• Classes in French and English

A few of the speakers at this ceremony were: The Program Director, Vice-Minister of Education, Cultural Attaché of the French Embassy, teachers, student representatives, Business representatives… all offered congratulations on the successful results (100 % student recruitment, and the establishment of scholarships), but also to assert that the program should continue but also continue to improve. Although direct funding is actually finished, the support for the program continues with the cooperation of 4 French schools involved in the project and a student exchange program.

The country wants to continue opening up to the international community. To meet this commitment, it is essential that foreign firms coming into Vietnam find the qualified manpower and qualified managers. This is exactly our position.

I would like to thank the organizers for having allowed me to speak for a few minutes during the ceremony to give Pentalog’s view on this program. We learnt about this program during the first visit of Frederic to Vietnam in 2008. It wasn’t PFIEV that made us choose Vietnam over North Africa or India, but it was a solid contributor. Indeed, we must be able to provide our clients with a high level of services in a variety of areas, including R & D.

Students of PFIEV, we will contact you via the email addresses taken from the student directory. I hope we can work together. You can also contact us via the website http://jobs.pentalog.vn or via the information contained in the insert of the student directory (page 10).

The past few weeks has seen an increased activity in our business obliging us to accelerate this plan, because 30 of these recruitments will be made before the end of 2009:

- In France (Orleans): project managers, project directors, technical and functional consultants. These people must have excellent English communication skills and a high degree of international mobility.
- In Romania and Moldova: about 35 people. We have positions for validation, embedded development, development management, e-commerce, network administrators, technical and functional consultants, and for BPO (call / back office)
- In Vietnam: web application developers and testers

Pentalog has spent this year € 0.5 million for training, or 4% of its sales, that is to say we are investing the same amount of money as the most prestigious software publishing and consulting companies in training. It is clear that whatever the location, Pentalog employees must be mobile (pivotal missions anywhere in Europe, even in the world and management, project managers must be able to spend several days or weeks on production sites even though they may not be from there). This year, Pentalog employees have worked for clients in Germany, France, Romania, Moldova, India, England, Spain, Finland, Sweden, Korea, Switzerland, Austria, Croatia, Vietnam…

Our commitment to our customers is very strong and there are many of them who are outsourcing between 80 and 100% of their software R & D. Our position as a technology company is recognized by the French state which has made us one of its partners in the framework of its policy to support innovation. All our sites which are members of the EU are eligible for the research tax credit.

We love people who speak many languages. Being trilingual is a standard in our house (over 60% of our workforce). Our internal growth is 50% for 2009. Our workforce has increased from 290 to 400 employees in the past 9 months and it is expected to reach 500 during the course of 2010.

See our Joblog, it will be updated with all the job opportunities in the coming days:
- http://jobs.pentalog.biz (all our ads in the world)
- http://jobs.pentalog.ro (for ads in Romania)
- http://jobs.pentalog.fr (listings for France)
- http://jobs.pentalog.vn (ads Vietnam)

- Key Capabilities of Next-Generation Project Managers (22 October 2009, CIO)
- Microsoft, Google seal Twitter search deals (22 October 2009, CIOL)
- Outsourcing Industry Mergers Spell Bad News for IT (22 October 2009, CIO)
- Top 10 strategic technologies for 2010 (21 October 2009, CIOL)
- Erschütterungen im BPO-Markt: IT-Dienstleister vor Übernahmewelle (21 October 2009, CIO)
- Five open source IP telephony projects to watch (21 October 2009, CIO)
- India to top Asia salary growth in 2010 (21 October 2009, CIOL)
- Update: Sun to cut 3,000 jobs as Oracle awaits merger approval (20 October 2009, InfoWorld)
- How Wall Street Will Kill the Recovery (20 October 2009, BusinessWeek)
- Chile’s Outsourcing Challenge (20 October 2009, BusinessWeek)
- Wo es in Deutschland IT-Jobs gibt (19 October 2009, CIO)

- Gartner: flat IT budgets, but get ready for growth (08 October 2009, ComputerWeekly.com)
- Indian IT mid-cap firms to post mixed Q2 results (08 October 2009, CIOL)
- Deutsche Unis in weltweitem Ranking abgeschlagen (08 October 2009, Financial Times Deutschland)
- 60% of outsourcing firms hiring more this year: Survey (07 October 2009, Sourcingmag.com)
- How To Deal With Corruption In China (07 October 2009, Forbes)
- Mehr Intelligenz fürs Software-Outsourcing (07 October 2009, Silicon.de)
- Study: 54% of companies ban Facebook, Twitter at work (06 October 2009, Computerworld)
- Bulgaria Gets Real about Its Economy (06 October 2009, Business Week)
- Indien verliert an Boden im Offshoring-Markt (05 October 2009, CIO)
- China’s Statistical Setback (01 October 2009, Forbes)

We had fallen behind in the release of this indicator. It is now available again with some modifications.

Here are the following Average Daily Rates for each of the countries in which we work. We have made a distinction between Bucharest – offshore, and the division of technical assistance to local clients.

France: EUR 460
Prices are progressing. This is logical since we have reinforced our team of project managers whose services are invoiced at a higher rate than that of technical assistance services. However this indicator hides many un-invoiced days. We have not yet completed the total invoiced cost for these profiles. Nor has their work schedule been lightened yet; they are regularly solicited, almost daily, for project evaluations for clients or prospective clients.

Romania: EUR 175
This figure is just a little below the price of our catalogue for dedicated teams (EUR 180) and so it still remains a competitive price.

Moldova: EUR 137
Our lowest ADR in Europe which also takes into account a few BPO services. These services are invoiced at around EUR 110 / day, lower than the Average Daily Rate.

Vietnam: EUR 91
This ADR is well within the range that was anticipated; this rate is for the moment entirely composed of the development of information systems. With new projects expected to arrive shortly (especially in the BPO industry), we should see these rates lower slightly in the coming months.

Romania – Local Clients: EUR 256
This is the average fee charged for technical assistance to local Romanians clients. It integrates an average rate for technical and functional experts, as well as for junior developers in the more conventional technologies.

The next indicator will be proposed towards the end of October and thus it will focus more on the rates of the 3rd quarter.

It was curious to see how fast they had disappeared, during the month of September and while the Euro had reconnected with $ 1.40 + +. Nobody heard Mr. Gallois speak about this a year ago on the same subject… No, everyone was waiting for Pittsburgh and even Mr. Gallois had no right to speak in the meantime. Yesterday, he said in Le Monde that things could go really bad for Airbus.

And he is right, because I think that this time the threats are much more serious. After Pittsburgh, nobody believes Geitner and Obama and their discourse about the strong $… that has moved towards the interior of the U.S… In reality, the $ is now a borrowing currency with its 0% rate policy, which will certainly continue for sometime. There is no question in my mind that Obama is thinking first of his 10% unemployed. The weak dollar is a blessing for him and the hypothesis of a 1.65 average is a reason for a real cry of joy.

The 13% budget deficit is going to translate more and more by the slow but progressive conversion of the central bank reserves.

From Pentalog’s point of view, we have never been better equipped to deal with this situation as our three production currencies are dropping against the euro and even the dollar for 2 of them.

Let’s go back to the 3 countries in question:

- Romania: our wages are determined in euros and payment is made in Leu. Our employees will have more and more Leu, since the latter has a strong chance of dropping further below the euro. In other words, for quite awhile we could be close to the status quo on our production costs. Salaries, for companies that pay in Leu are also blocked, which minimize the wage demands of new employees.

- Moldova: The currency (Moldovan Leu), has also been dropping in front of the two major world currencies which interest us. Our salaries are determined in Euros. Again, another period of status quo is likely in perspective. The wage levels asked for in Euros could possibly fall in the coming months.

In Romania, as in Moldova, we could possibly see timid reductions in costs, given the fact of the rising number of job applicants and reduced demand on other budgetary items (buildings, vehicles, air transport …).

- Vietnam: Our salaries are established in $, but paid in Vietnamese Dong. Now the Dong is under performing against the $ which is under performing against the Euro. Our production, invoiced in €, is particularly interesting today. Many developers are looking for employment and the wages requested have dropped slightly. We have renegotiated our premises rental rates down sharply and we have even found space at 10 $ / m2 monthly, which is less than € 7, where we were offered space at $ 17 in early 2009! We’ve moved in the space of 6 months, from rates higher than what we had seen in provincial Romania, to prices lower than 30%.

In short, at present, we are “relatively” protected from the risks of this currency crisis and are instead on the right side of the mathematics. However, the possibility of a violent push of inflation could relativise these protections, without destroying them. I am thinking in particular about the threats to energy and raw materials which would inevitably create serious problems, particularly in emerging countries such as Moldova or Vietnam.

Currency problems are more likely than the financial crisis to have serious negative consequences. But the commentary of this type could easily slide into cynicism. Here I have tried to stick to simple facts.

- IT professionals fear ‘brain drain’ as UK opportunities dry up (5 October 2009, Computer Weekly)
- India to add more rules in IT Act soon (2 October 2009, CIOL)
- Europe finds flavour with Indian outsourcing (October 2009, Offshoring Times)
- China’s Online Censors Work Overtime (30 September 2009, Business Week)
- Germany Benefits from Global Recovery (30 September 2009, Business Week)
- India’s new outsourcing rival–Romania? (11 September 2009, cnet); missed that-one a few weeks before, but it’s very interesting…

In a conversation in a linked group, in which I was participating, I had an exchange with someone who justified to me the relatively low level of English amongst Ukrainian developers, explaining that for communications in an offshore project, there was no need for all team members to be bilingual and that it was sufficient to have a few members of the team proficient in English.

I am in total disagreement with this position which also, I have heard in Vietnam. With the affirmation of the agile method, it becomes impossible to accept into the teams, people without adequate language skills, especially those that are used in the different projects. The use of the Agile method frankly implies excellent language skills, and this includes oral.

But I would go even further and affirm that the practice of the English language is not sufficient for ITO companies looking to distinguish themselves. At Pentalog, we have largely based our success on the practice of several foreign languages in our teams, first and foremost, of course, French and English … but not only!

In 2008 and 2009 Pentalog teams led missions in Romanian (I speak about French speaking Romanian within large companies in Romania), Russian (Kiev and Chisinau), German and of course in French. We have recently recruited several German speaking associates to further strengthen our ability to be in step with this great country, which is naturally proud of its culture and its language.

I’m not saying it is imperative to speak other languages besides English to work with non-English speaking people. However, the strength and quality of piloting a project necessarily benefits those members of the team with the ability to speak the language of the client. Thus, at the risk of surprising someone, I would say that if the Romanian customers particularly value the experience of Western consultants, they still prefer those consultants who have taken the time to learn Romanian … and now they do not hesitate to ask us for people speaking Romanian. A few years ago, no one in Romania would have dared ask that a Western company speak their language.
Speaking a foreign language for a developer means being able to present his work, to be able to communicate his ideas, but also it allows each associate to evolve towards management positions in customer relations, functional studies and consulting. There is no doubt, in a business analysis it would be noted that professional expertise starts by speaking the customer’s language. No doubt neither that the best companies offshore / nearshore for some time now also offer these same services.

The last point I would like to make about the practice of English, (including a very good level), is no longer exceptional. From now on you must be more ambitious than this. The objective should be that all developers are able to work in at least two European languages. At Pentalog, we’re really close to doing this because almost 80% are completely trilingual, 25% quadrilingual and some even go beyond speaking 5 or 6 languages fluently. It is not these few exceptions that I wish to draw your attention too, but rather the effort that we are making, in order that our teams can distinguish themselves in the 1st and 3rd European marketplaces. Each year, our trainers provide 1000 days of language lessons. Our staff devotes more than 1500 man days per year and nearly one third of our total budget for training (500, 000 and 600 000 € in 2009). The problem of British and American markets is that everyone can work there, from Eastern Europe to the Indian federation, to China via the Philippines. Moreover, the average price paid by the Anglo-Saxon companies is often lower than those accepted on the old continent.

These figures are the key to our success. They allow us to win contracts that others can not win, because the client does not need to waste time translating or depending on the quality of the translation. If IT was a science, there is no doubt it would be a social science, simply requiring the technical means and methods belonging to the world of technology.

Here are the latest press articles we selected for you:

- Wipro sees pick-up in European business in Q2 (14 September 2009, CIOL)
- Deutsche Telekom Torn In The USA (14 September 2009, Forbes)

And for our German-speaking friends:
- Ausgaben in IT-Innovationen sinken um elf Prozent (08 September 2009, Computerzeitung)
- Unternehmenssoftware, Alle Zahlen stets im Blick (07 September 2009, Capital)
- BPO: Firmen lagern immer komplexere Prozesse aus (07 September 2009, Computerwoche)
- Deutschland fällt bei IT-Kompetenz leicht zurück (03 September 09, Computerzeitung)

I am returning in a week to Vietnam, where we will soon launch two new platforms for a medium-sized project, and possibly a third one, if we manage to convince one of our current prospects.

But mostly, I am profiling an incredible November that will take me to the Indian federation, and in all directions in search of a nugget in the development of embedded systems (I will give more detail in the coming days), then I will resume my travels, direction Hanoi (without returning to the France or Romania, for sustainable development reasons) where I will be staying for at least ten days.

Again without going through our European bases, I will stop this time at the western gates of the East, in Tel Aviv, as part of an exploratory mission for Croissance+ in the Israeli high-tech clusters. Only then I will return to either France or the Balkans.

This run should take at least one month. During this long trip I’ll be looking for new sources of potential growth to offset the effects of the present day crisis. Some of our potential customers need India and I need to see how to connect to this vast reservoir of possibilities with our Pentalog strategy and see how it can be a possible solution in our development plans.

I am going to Isreal for another reason; this country seems to have shown a growing interest in outsourcing from Eastern Europe. So there again, I will look for new leads but also new ideas.

At Pentalog, the Marketing and International Relations teams recently started working with a new economic intelligence unit. These “watchers” will give us a weekly anthology of newspaper articles found on the net, which are related to our business and anything else which is of interest to us. We will share this info with you on this blog. So, be ready with your keyboards to make comments!

Motorola planning to test 4G in India (24 août 2009, The Hindu Business Line)
Die besten Infrastruktur-Outsourcer (18 août 2009, CIO)

You must be thinking that this post is already obsolete, but hey, better late than never… I usually write a little something about each professional event that I attend. The Gartner Outsourcing and IT services summit will not escape the rule…

It was a first experience in London for Pentalog last June, and for other Moldovan companies that were represented on the stand organized by ICTAM. The space for exhibitors or “solution showcase” was smaller than what I expected: around twenty companies, mostly in the heavyweight category of outsourcing (Wipro, Getronics, Tata, Siemens , Infosys, etc.). Needless to say, we felt a little bit “small”, no easy access to visitors, who gave me the impression of being over there only to visit their current suppliers and of course attend the conference rather than to study the proposals of potential new providers. There were also some national pavilions: Canada, Brazil, and Morocco with Casanearshore. Our biggest competitor in Moldova, which had announced their participation, was a no show. We made a few contacts that are interesting but certainly they will not give us any business in the short term.

Concerning the conferences I had a chance to attend, and especially those conferences that referred to the future of offshore, I was surprised and disappointed, that the speakers barely mentioned Romania and Moldova was never even mentioned, either for IT or BPO in Europe. Vietnam was hardly even mentioned, neither. It is true that Gartner clients are companies whose sales are expressed in billions of euros. And it was clear that the conference addressed these bosses who require teams of several hundred people, and therefore are more likely to talk about countries like India. This is unfortunate because the smaller countries who have gained a certain maturity such as Romania have a role to play in the Global Sourcing strategies of these large companies, through their skills, experiences and having learned how to exploit “niche” markets. They are carriers of added value compared with the usual heavyweights. We can and will demonstrate this at Gartner in the years to come…

And finally a few pictures to show the Gartner exposition and London…

At Pentalog, there have always been two ways to become shareholders:

Among IT services companies, Pentalog is in France (since the holding company is a French -one) probably one of the players that create the most value. Indeed, the positive development of businesses is performed according to two principles: organic growth and profit generation. Pentalog is at the top for the first principle and from now on appears to be among the best for the second one.

So we are talking about a lot of money here. Each time 1% of the capital is distributed to employees of the group, the current shareholders relieve of EUR 100 000.

But the major difficulty, once the legitimate resistance of others has been dispelled, is to determine who will be the lucky ones and how much they will receive. It is true that there is a distinct advantage for those who have already purchased shares with their own money. This is the best way to show their confidence, support, and to be recognized by the other shareholders. Furthermore, these distributions take place after several years of presence within Pentalog. It is important to have demonstrated sustainable commitment to the enterprise model.

Usually I put together an initial list that I propose to the Board. This list is discussed and some names may be removed while others may be added.

This year, as I did on many occasions, I wish to continue to fulfill the original vision of the founders of Pentalog. The company is a capital that we need to share among the most deserving persons.

Involving the six members of the Board in the decision avoids omissions and favoristism. We discuss and then we decide. Several people this year will strengthen their participation and they do not know it yet. Others will enter the round table.

With certainty, I can assure you that Mircea Popa, our friendly German manager, will make a substantial capital input as he will “turn” the shares of the German company into shares of the French holding company. I would not be surprised if at the end of these transactions, the capital held by employees would exceed 60% again. Within all offices, there is at least one partner, sometimes more and it is certainly one of the best ways for the top management of Pentalog to never lose sight of the interests of all stakeholders of the company.

For several weeks now, and Pentalog and an important actor from Paris, who also is present in New York, are considering the development of a joint project combining the expertise of one, and the capacity of the other, to master the offshore production.
The bid developed together, would revolve around the concept of “support services and migration” on platforms Murex and Calypso.

In an industry where the concept of quality services is absolutely essential, but which also faces the need to control costs, our bid would have many advantages and benefit from our Romanian platform, some of the benefits being: ease of movement for the engineers and consultants (European), jet lag much lower than India (only1 hour), and mastery of several European languages. All of which meet the legitimate concerns of those considering the use of an offshore / nearshore IT (consulting and service) company.

In fact, we have prior to this agreement, had a first successful experience in the field of software development. Pentalog has contributed over the past two years to the evolution and R & D of a fund management application for a subsidiary of one of our partners.

In all modesty we consider that our two companies would be the most legitimate to build the first ITO-European Investment Banking Corporation!

The month of May was particularly rewarding for Pentalog Vietnam because the team made its first delivery to its first customer. We must say that the office in Hanoi had a very strong production start with 15 people initially, on a large development project using the latest Java technologies. A real treat for the developers who were more accustomed to maintenance projects or coding phases.

Whether in Europe or Asia, Pentalog is loyal to its quality mark. The working methodologies as well as the quality assurance system are implemented identically, thanks to the presence of Monica during the first 3 months and to spending 2 weeks at the office of Cornel, our technical manager. The client has expressed his satisfaction but we will not stop there, we will continually deliver better quality to our customers.

So many stories and you may be wondering how we are at Pentalog Vietnam? Oh well for you, for your pleasure, we have filmed the videos below with the help of the Marketing Team in Hanoi and Chisinau. Pay attention to the special effects provided by the team of Michael Bay in their free time during the execution of Transformer 2.

One year after the opening of this first office, the local team now has about 50 employees and it had become urgent to give this Branch Office more space in order to be more functional.

This is now done! Pentalog has just moved into one of the newest office buildings in this city of Central Romania. Eventually it may accommodate more than 80 employees.

The Branch Office in Sibiu receives some of Pentalog Group’s most prestigious clients and their operations. It was necessary to have the resources of a larger office in order to be in line with our ambitions.

Thanks to the infrastructure team and to all those who helped them moving into the new building!

On June 15 and June 16 I will attend for the first time the Gartner Outsourcing conference in London. With 4 other Moldovan companies from the IT & BPO sectors, we will have a booth representing the Republic of Moldova.

When one notices where this event takes place (a big London hotel near Hyde Park), who attends it (managers of major European companies), and the cost if only a visitor badge (over EUR 2000), one can easily imagine that such a prestigious event is not necessarily within the reach of SMEs… The organization and financing of this booth by ICTAM “Information & Communications Technology Association of Moldova“, is an interesting opportunity that we have seized in order to introduce ourselves to the UK market and promote Moldova, which is the most competitive Outsourcing destination in Europe.

There is a program of speeches with various professionals, the opportunity to talk individually with Gartner analysts; this only lasts for 2 days but they will certainly be busy and teach us interesting things!

A few days ago, I came across an article in the French It Mag commenting about the results of the Indian IT services companies which have been collapsing on a continuous basis since late 2007. Many of them have even registered losses. This information, except in the case of Satyam, still surprised me for the simple reason that the downward trend was even more staggering because these corporations had at one time posted incredibly high returns. Some have even shown 30% EBIT on hundreds of millions. The scarcity of customers in these times of crisis does not seem possible to explain totally this rapid fall.

I see several possibilities:

But anyway, the current drop is not consistent with the declining profits of U.S., Eastern and Western European companies, which share the same customer base. They are not in the process of undergoing a shift from +30% to -10! The most profitables-ones will go from 12% to a balanced financial statement and the worst performers will go from 3% to -5%. In short, the decline in profits will be limited to less than a dozen points.

It remains to be seen whether the dire predictions of this article will be confirmed or not, sweeping aside in the latter case the value of this short note.

This is not a promise yet, but an idea that is being considered within the marketing department of Pentalog. It seeks to take into account a certain situation you have inevitably heard about.

In fact, we want to create impulses & reflexes for initiatives, either to survive or to adapt, or even to dominate, and to prepare effectively for the future rebound.

I can see the incredible amount of stress within companies, which does not produce anything good, on the contrary.

I propose you to convert it into an efficient anti-crisis action: the assessment of the offshore destinations of your choice, Romania, Vietnam and Moldova.

But much better, WE FINANCE THEM! This is what matters now, I believe! We envision a formula like this one “4 stars accommodation available for any purchased plane ticket “, or “offered plane ticket” … This could take this form “open offer to the first 10 offshoring projects reaching us before …”. It’s our job to formulate this and define the eligibility criteria.
In any case, the idea is to assess an anti-crisis strategy that is not expensive.

In a journey that resembles the one already taken by many of our customers, we propose you to evaluate the universities, the Pentalog infrastructure, the Incubator, the project managers, the quality plan, whatever!

We will think abot this trick and will test it by mail and see if software engineering companies are interested.

In fact, we have just experienced a first full withdrawal of one of our long-standing customers. We discussed a lot about this. Although he was very satisfied with our services, he lacked the volume on his French team and strategically preferred to protect it. It is hard, but understandable. After all, it is also the management of this type of risk and situation that we sell to our customers.
Fortunately, this is not a big project, between 3 and 4 people per year.
On the German side, it is a bit different. The adjustment has been continuous since the beginning of the crisis. Some of our customers have frozen the development of our common plans, while others seek to reduce their current commitments. We heard that four collaborators were released from these projects in May.

In total, since the beginning of 2009, 17 Pentalog employees have lost their mission.

Fortunately, we always have projects in progress. They continue to do more than compensate for these releases. Since early 2009, in order for the comparison basis to be the same, we have implemented 55 new missions for our employees.

But as I said earlier, it is in the second semester that we will really know what the crisis does in our industry. In the meantime, we must tirelessly seek to meet the expectations of our customers. This is the best anti-crisis weapon, anyway.

In a conversation with one of our JV partners last week we spoke a bit about the geopolitical and strategic nature of offshoring. For a few minutes, we considered the global outsourcing map.

We came to the conclusion that the “Eastern Europe” demand was responding to social and cultural issues and kept both parties between protectionism and competitive relocation.
“Asia” is mostly a matter of cost reduction, when constraints of time shift, flow of goods, people and culture are not obstacles.

I am stating here what has been obvious for years. Besides this simple mapping, which already requires the construction of a complex network of production units in order to be exhaustive, I realize that there are also regions with specialties that are related either to old technological specialization of these countries, or to a perfectly contemporary desire to develop their business portfolio.

Let’s say that among the offshore countries, everybody does business data processing but not all in the same way:

- small countries in Eastern Europe (Slovakia, Czech Republic, the Baltic Countries, Bulgaria, Moldova) are mostly involved in small projects. They are often strong enough to support an innovation process or small maintenances. Few human resources often lead to prohibitive cost levels (except Bulgaria and Moldova).

- large countries in Eastern Europe: Ukraine, Poland, Romania, Russia. They have the power to build project platforms with dozens of collaborators (including more than 50). But they are also involved in small projects. They often have a catalog with important specialties, whether in infrastructure or large applications (SAP, Oracle, BO, ETL …). This allows them to exceed the standard typology of usual offshore development project (Java / Dotnet +1 DB).

- Asian countries inspire us by their ability to upload hundreds of collaborators but worry us because of functional aspects and communication.

In embedded computing it is much more complex because very few countries actually do it when the demand explodes. Choosing a production area in this respect is not easy because the client often requires a high level of expertise. I’m saying EXPERTISE AND NOT JUST EXPERIENCE. This expertise is often acquired by participation in projects in the industrial field of reference for each client.

So where can we make embedded aeronautics? Of course where we build aircrafts: in Russia, a bit in Ukraine and Brazil. But the Indian policy is also starting to be successful, because from now on there are real capabilities. However, be careful, because on this market, membership to NATO may be decisive.

Where can I make embedded telco: where we have been strong in telecom for a long time. In Russia, Romania, India, Poland.

What about automotive? Romania, Poland, Russia… and India.

In conclusion, wanting to offshore or nearshore today, is no longer enough, because the promise of cost reduction does not satiate contractors anymore. Offshore countries had to specialize, to become more professional. Nevertheless, we cannot achieve progress without a thorough analysis of the national logics of competitiveness and excellence, that are developed both on the legacies of the past and on development policies.

In this context an offshore/nearshore player will determine its choices based on the offer he intends to deploy. One has to admit that, to date, only India offers a full specialties chart; Russia is not far behind. On the contrary, both have serious problems when working in too precise areas or when the communication process becomes complex, including, for example, round-trips between client and suppliers, or the understanding of specifications written in other languages than English, many years before offshore outsourcing.

For all these reasons, I conclude that the offshore world is forced to make choices dictated by what I call “geopolitics of service supply”. I don’t know how one can be a complete low cost outsourcer nowadays, without having offices in Europe and Asia. This seems to be the minimum requirement. Yet, several units on both continents may be necessary in order to have a portfolio of specialties that tend to be exhaustive.

I think it is an early analysis of this constraint that allowed Pentalog to dig a gap with its competitors. We have first implemented it at the scale of Romania-Moldova, and later on in Asia. The benchmark hasn’t not finished yet. Romania is not the nearshore of Sweden (we will therefore go to Petersburg and Riga), India requires compensations in engineering when we sell them Airbuses (therefore we will think about India), the explosion of BPO could bring a smile for Morocco… ITO, BPO, EDO, are never-ending stories!

Since a few months now, I have been feeling a great commercial pressure from Indian offshore companies… We knew they were commercially aggressive but now they become harassing. There is no day without me receiving some canvassing emails or phone calls. This reveals some difficulties without a doubt, as highlighted in a recent article published in the IT press, announcing that Gartner expects a slowdown in the growth of offshore business in India… For the first time in its history, Infosys is also expecting to record a drop in sales of about 3 to 6%in 2009.

As an explanation, there are of course the consequences of the global economic crisis: customers tend to decrease the volume of their operations, they seek to renegotiate prices. But before that, and in a general manner, there are also high turnover rates, salary inflation, infrastructure problems, the Satyam scandal, the attack in Mumbai… in short, India’s reputation was hurt lately… This benefits other destinations such as Eastern Europe, Brazil, Vietnam, which appear to increasingly overshadow this giant. It is true that India is “a must” for these very large contracts that require the mobilization of huge resources in record time, but these customers represent only a small percentage of companies looking to outsource development projects today. And for the establishment of teams of 10, 20, 50 or 100 people, there are many alternatives in other countries, quite capable of responding to such a need. Perhaps it will rather be those countries which will benefit from the trend tending to promote outsourcing to low cost countries…

Well, it is clear that India should still keep its offshore leading position for a while. Indeed, in terms of resources, tens of thousands of young engineers in computer science graduate every year from Indian universities. At this level, no other country can compete, not even China, who faces linguistic problems that hinder the development of the country on offshore markets. One needs to pay 10 to 15% more for English-speaking resources there and the key destinations where one can find these rare gems are already saturated. So the prices go up even much faster than in India…

And with their experience, Indians know how to benefit from the rise of other offshore nearshore destinations. Most of the giant Indian companies have subsidiaries in Eastern Europe and they are in the process of settling in Mexico, Brazil.

They will not let the biggest share of the cake be taken away like that!

Returning from Chisinau the other day, I was struck to see in this country experiencing such difficult moments, how many of our employees are expecting babies. Later, Serghei, vaguely concerned by the topic of my article, has also talked about our employees whose wives are also expecting. In Brasov, Romania, the situation is almost identical.

What does this birthrate in Eastern Europe mean? I must confess I wasn’t very up-to-date about the current demography of these countries and I imagine that Romania takes advantage of the fantastic growth in the past years. Life in Romanian cities is more and more similar with the western models, although much remains to be done. However, in Moldova, even if we registered a real economic growth, uncertainty about the future has always been noticeable. Therefore, I am more surprised by this enthusiasm for parenting.

However that may be, I am pleased to see this wave of optimism, because one doesn’t bring children into the world so they could be unhappy. Could the Branch Managers tell us how many people in their offices are expecting a child or have recently become parents?

I asked myself this question last night while I was assessing the situation in Moldova… which has nothing amusing in it. However, I made this reflection, namely that all offshore countries without exception were dictatorships and that nearshore countries were already, almost all, democratic. You may think I satirize, but the following short list gives me reason:

- Nearshore: all countries in Central and Eastern Europe, that are EU members, are democratic; they don’t dislike those who only know what a dictatorship is. Argentina, Chile, Uruguay are nearshore US countries and pose few problems to their inhabitants. In Europe, the exceptions have all the same characteristic; they are the former RSS (Moldova, Belarus, Ukraine). Happiness does not return quickly where the imperialism of Moscow has passed through. The prize goes without doubt to Belarus, which always has a leader of the Cretaceous era (the era of morons?). Morocco is not a democratic country and it is quite possible that France has contributed to this situation. Tunisia is not a democratic country either and wants to play the nearshore card as well.

- Offshore: Madagascar has one for a while now, but is India a democratic country when 80% of its population lives an unspeakable fate that nobody wants to improve? China, Indonesia, Malaysia, my dear Vietnam are not examples of respect for human rights either. Finally, I find no democracy in the offshore area.

So does this mean that democracy is too expensive for our industry? In fact it is not impossible, although simplistic yet. As recently as last week, one of our competitors in human resources in Moldova, wanted the Communists to win the election “so that nothing would change.” I will not give my opinion on the Moldovan election because I’m not legitimate. Indeed, for me, the problem is not that the Communists win or lose this election. The real question is what the regime will be, which, by its policy, will ensure the country’s economic development and respect for basic rights to education, health, vote with respect of democratic procedures. Here are the real issues. I explained to these people, that we, the software companies, would have to pay our payroll taxes, as true corporate citizens, if they were going to ask for fiscal measures for us and our employees.

I then explained what everybody knows, including themselves, that people would leave this type of country for the living conditions rather than for the wage (what most of the time, leaders do not know). I’M REFERING HERE TO OUR BUSINESS ONLY. But this guy refused to understand me and explained the benefit of his wage system, based on the use of a tax heaven to pay its employees. I will return to this topic one day.

I believe that, in fact, it is not democracy that it is costly in itself. Nobody questions the strength of Canadian democracy and yet the work is much cheaper in Luxembourg, Sweden, Germany and even France.

I am not absolutely looking to fall on my feet at the end of this difficult exercise, but I would say that these countries need the revenues that we generate. I would also say that we are demanding companies, in terms of educational and technical infrastructure. Our companies are, by nature, open to the outside world through their customers. I fully felt the emotion of those who shared this difficult week with us. They were interested in what was going on and discussed with the teams. The employees of offshore companies, either Moldovan, Belarusian or Moroccans are often at the democratic forefront of these countries and often share much higher expectations than the rest of the population. We often offer them the only solution to put their knowledge to use while remaining in their country.

In conclusion, I would say that no one, for these reasons, could settle in the worst dictatorships, regardless of the wage cost. Who offshores in North Korea or nearshores in Libya? Thus, the presence of IT offshore activity could be used to measure the degree of hardness of a dictatorship! Isn’t this amazing?

We regularly mention on this blog web 2.0 marketing tools that are at the heart of Pentalog’s web-based strategy. We are always on the lookout for new tools and we strive to take advantage as much as possible of the communication & sale opportunities offered by these tools. Here is one that the Marketing team has recently adopted: Google Maps.

At a glance and with a few clicks, you get an overview of the worldwide presence of Pentalog, its partners and customers (non-exhaustive list), its collaborators away on official business, including detailed figures and other details on each entity listed on the map: size of the mentioned customer, mission title, number of employees at Pentalog, etc. In short, this mapping is a nice showcase, which clearly reflects the international position of the group. See it for yourself (click to zoom):

Afficher Global map Pentalog sur une carte plus grande

The recent fluctuations in the euro / dollar parity have significantly destabilized the number of companies exporting to other countries in the dollar area. Thus, Pentalog has decided to adapt to these constraints by offering companies to purchase their services directly in dollars, thus limiting the exchange difference between the client and the supplier.

This new catalogue edition with the 132 services offered by Pentalog particularly aims companies in the aviation, software, defense and pharmacy sectors. At the present time nobody knows exactly what will happen in this respect. However, most experts generally agree on two scenarios:

- the dollar backed up by a solid but slow return towards the American growth. The price target turns between 1.35 and 1.45 for 1 €

- the dollar collapsing under the sustainable pressure of a fiscal deficit and the high American unemployment rate of 10%. The price target of the proponents of this scenario turns between 1.55 and 1.75 for 1 €.

In both cases, this means a rise of the Euro compared to early 2009, which effectively means a loss of competitiveness for European productions for the Dollar area. It’s up to you, dear exporters, to tell us if you are interested!

For its part, Pentalog being present in two economies which under-perform the euro, including a purely dollar economy (Vietnam), already has the productive capacities that allow us to support this model.

The fourth edition of CeBIT in which Pentalog participated as an exhibitor is now over. What conclusions can be drawn? Well, it was average, no great surprises… While the first two editions provided good opportunities in terms of business (the Pentalog–Dmailer collaboration began following CeBIT 2006) as well as in terms of information, the 2008 and 2009 editions ran out of stream.

The day before the trade show started, as I got on the plane to Hannover, which is usually full with business men, I saw the empty seats and the numerous German tourists returning home after visiting Paris, and I told myself that this week wouldn’t bring the expected results.

Indeed, from the first day, I heard that the number of exhibitors had dropped by 20% compared to 2008. Some of the halls were half empty, in some of them the aisles were as wide as motorways… On the last day, Deutsche Messe AG announced on its website a 20% decline in visitors. I would specify that 20% refers to “professional” visitors, because I didn’t feel like there were fewer goodies hunters than usual. The presence of Schwarzie (California was the partner country of CeBIT this year) attracted many fans, but perhaps not enough IT professionals…

The booth of Romanian IT companies, supported by the Romanian State, as usual, had to face serious organizational issues this year, mainly due to the fact that some companies cancelled their participation. This resulted in a reduced budget: lack of communication and inappropriate location of the booth, even though it was better than last year, when we were wedged in between MS and SAP, since the hall dedicated to outsourcing had been removed, due to lack of participants. So we met few qualified visitors. We had some interesting discussions with contacts we already knew before the show. However, certain prospects that had announced a visit to our booth did not even come!

I went to see our offshore competitors and I had a few surprises. Among the things that have caught my attention, I found:

- The Egyptian pavilion, impressively luxury and modern

- A Spanish company offering nearshore teams based in Spain to big Spanish companies, to an average rate of € 240/day.

- Chinese companies, which were everywhere, but I did not see many offshore providers among them. They were rather vendors.

- Thailand, whom I saw for the first time on this show, as well as Vietnam, were represented on a national pavilion.

- Indian outsourcing companies offering rates starting at € 3 per hour!

I also attended a conference called “Webciety – The Internet as the heartbeat of modern society”, or how the Web 2.0 is radically changing the world of business as well as the lives of internet users. Among others, there were LinkedIn-boss Reid Hoffman, Marco Borries, Vice-President of Connect Life Yahoo! Inc. as well as German specialists in new media and web-marketing. It was amazing. I shall come back to this topic later.

As a conclusion, CeBIT is an essential event in Europe, but it is not as interesting for us anymore as it used to be a few years ago. Of course, this is partly due to the economic down-turn, but not only. Many German visitors I met considered that CeBIT was relying a bit too much on its reputation and lacked innovative capacity. It looks like it increasingly suffers from the competition of more specialized trade fairs in Europe.

Still, this did not prevent us from enjoying our evenings with other Romanian exhibitors, at the usual “Ernst August” brewery. We remain optimistic about the evolution of our business in Romania, a country that is now truly recognized as a “must” nearshore destination in Europe. I wish good luck to those who took part in this event!

It is the fourth time Pentalog is exhibiting at CeBIT.

My first impressions: small Romanian companies which used to attend the trade show are not here this year. There are fewer Romanian companies than usual on the booth and there is only one that be can be considered as a serious competitor of Pentalog’s. Our position in hall 7, dedicated to AutoID/RFID solutions is better than last year, we are surrounded by companies such as Airbus Germany.

Dear visitors, I am looking forward to meet you in hall 7, booth A04 (East entrance).

This year again, Pentalog will be a co-exhibitor on the booth dedicated to Romanian IT companies in hall 7 at CeBIT, in Hannover (Germany).

Pentalog has went a long way since its first participation in the IT trade show in 2006. First, the German subsidiary Pentalog Deutschland GmbH was created in 2008, following a meeting at CeBIT in 2006, and substantial business development progress has been achieved in German-speaking countries (a sales figure of over EUR 2 million expected for 2009). Then, more recently the group created a Vietnamese subsidiary in Hanoi, which will employ fifty IT engineers in a few months time.

Pentalog is not only a Romania and Moldova specialist anymore. It is a global actor offering its clients nearshore solutions in the Euro zone as well as offshore solutions in the Dollar zone, and local support on clients’ sites, anywhere in the world. Among the Romanian exhibitors who will be present on the trade show to offer their offshore-nearshore services, there is no doubt that Pentalog will be the biggest challenger and the most internationally-oriented participant, offering the most complete range of services.

Contact us to plan a meeting on the trade show.