Dutch software market:
A dream comes true?
Appendix
Internship International Business
Jitske de Jong
Student number: 1228021
University of Groningen
Groningen/Saltillo, August 2006
2
Appendix
List of interviewees:
Mr. Jos Herps CIM Solutions
Mr. Arthur Nederlof Enovation
Mr. Marc den Engelsman Icera
Mr. Frans van Wessel Atos Origin
Mr. Murk Westerterp Tempo Team (no summary)
Mr. Antonio Hernandez INTECH CEO (no summary)
Mr. Jorge Sala INTECH Marketing manager (no summary)
Ms. Nora Cabello INTECH Project manager
Mr. Rene Chandler INTECH Human resources manager
Summary of the interview with Mr. Herps of CIM Solutions
February 23, 2006
(Mr. Herps has worked in the past at Ericsson in Reijen and knows Mr. Hernandez (CEO INTECH) from that time.)
CIM Solutions is a company that provides high quality professional services and solutions in the areas of Business, Administrative and Industrial Automation
What are the developments in the next years in the Dutch software market?
There certainly will be a growth, in the end of 2004 we had 90 employees, in 2005 150 employees and in the end of the year 2006 we will have 250 employees. Dutch companies are willing to invest again because of the growing economy.
What are the developments in the area of labour?
At this moment, we are able to fulfil every vacancy. (CIM Solutions is planning in advance to get an idea of the number of people that they will need in the future.) There will be a shortage of ICT specialists in the next years. There are different ways to solve this problem:
Hire new employees and train them
Outsourcing
What are your experiences with outsourcing ICT activities?
CIM Solutions does not outsource, we only have our own employees who work at the customer site. Customers of CIM Solutions have the following experiences:
There are experiences with countries from Eastern Europe, India and China. The following problems arrised:
No total satisfaction with the products: no fit with the requirements (because of differences in language and because there always are modifications)
Difficulties with coordination because of the large geographical distance Lack of flexibility
Mr. Herps identifies the following trend in the area of outsourcing:
“The intelligence” stays in the Netherlands; the components with easy requirements are being outsourced, so only small parts of the software. People are hired for small parts, not for whole projects.
How would you choose a partner for outsourcing software development?
Knowledge is the most important thing! There should be a match between the
technical and domain knowledge of both companies. Specialist knowledge can not be outsourced. To train ICT specialists costs much money so it is very important to have long-term contracts with the outsourcing partner.
Price is always important. The problem is that the advantage of low-cost countries is omitted when the costs of coordination and management are count in. Moreover,
4
there are always extra costs when the end product does not meet the requirements. The turnover that is lost when a product is not delivered in time can incur fast. So Dutch companies are careful with low-cost countries, knowledge is much more important!
What can distinguish an outsourcing partner?
Flexibility is very important! Also, continuity of the relationship between the companies is very important. Often, you do not see who is working on the project. As a result, quality can be less than what was agreed. So it is important that an outsourcing partner put his priorities right and makes a clear planning. In the planning is should be clear when en how long one works at the software development project. In that way, you can make sure that the quality that has been agreed is delivered.
INTECH?
Companies are careful in outsourcing complete projects. Mr. Herps thinks that it is a good idea for INTECH to set up a company in the Netherlands. In that way, they can learn how business is done in the Netherlands.
INTECH & CIM solutions?
CIM Solutions is first cooperating for a while with a partner to discover what kind of expertise the partner has. After that, possible ways to cooperate are discussed. The idea is always to build a long-term relationship. (again: knowledge is very important). Further, CIM Solutions always works with its own people because they can be trained better and quality is guaranteed. The customers of CIM Solutions ask for their own people, so they do not want foreign ICT specialists! On the short term, there are no possibilities for INTECH.
At this moment, Mr. Herps does not know if it is useful to talk with INTECH about possible ways to cooperate. This depends on the plans that INTECH has in the Netherlands and on which parties INTECH is going to talk to. Of course, Mr. Herps wants to be kept informed about the developments of INTECH in the Netherlands.
Summary of the interview with Mr. Nederlof of Enovation
January 25, 2006
The core activity of ENovation can be summarised under the header 'Managed Services'. By this all IT services are meant that enables to take over various parts of the operational management of a company.
What is your motivation for outsourcing?
Financial considerations Availability of resources
The market for ICT specialists has a shortage. Therefore, the salaries are very high. Compare with China: the Dutch salaries are ten times higher than the salaries in China. Shortage is spread out in every line of business in ICT. Because of the fast change in knowledge (cycle of 1,5 years), knowledge will be obsolete very quickly. Especially, nobody has knowledge of 25 years ago anymore, so there is a shortage of knowledge of specific programming languages.
There are three major problems with outsourcing:
1. IT projects are always unique. The customers always want something new.
So it is important to make clear requirements (tailor-made). Analysis of what kind of work has to be done is very important. This is a bridge between the customer and the ICT application. Making the requirements always has to be done in the Netherlands. This can not be done in a foreign country because the knowledge of a specific sector is very important and can not be outsourced. Foreign companies do not have this specific knowledge, so it is very important for a software developer to stay in contact with the market. It is not possible to outsource the whole project, this has too much risk for the Dutch company. However, it is possible to build applications with clear specifications like products with Microsoft and Oracle.
2. Foreign companies have another mentality. As a Dutch company, you
have to deal with differences in working methods, work ethics, communication, conceptions, etc.
3. Language. Communication is always difficult. Although the people speak
English very well, communication is always difficult. Especially for ICT projects, it is useful to get requirements in your own language.
Solution:
Intensive cooperation (abroad as well in the Netherlands). Work with mixed teams which can exchange knowledge. It is important to have local ICT specialist because these persons have knowledge about the local market. Further, it is important to train the ICT specialists and build a long-term relationship. In that way, try to cooperate and excel. Treat each other as colleagues!
How do you select a partner for outsourcing?
Search in your own branch: what is happening abroad in this area? Search for mutual benefits
6
Knowledge makes a partner very special!
How are costs of a software development project calculated?
Costs are calculated based on an estimation of man hours needed for the project. So it is very important to have good insights in your own processes and have a good quality system. Fixed prices as well as calculating costs when the project is finished has advantages and disadvantages.
What are your first thoughts when thinking of a Mexican software developer?
Mexico is unknown for software development
Why is the United States using India for outsourcing software development and not Mexico?
Why does INTECH want to go to Europe? What makes INTECH special?
Summary of the interview with Mr. Den Engelsman of ICERA
February 21, 2006
ICERA is a company that develops Transport Management Software (TMS) and the supporting software for the TMS. Further, they deliver CRM systems for E-marketing, company databases and tailor-made solutions. At this moment, ICERA has three employees.
At this moment, the TMS is selling very well. There is much demand and ICERA has much work to do. For the future, ICERA could use some more employees.
Note: Mr. Den Engelsman thinks that hiring more people will cost too much time and money to be profitable.
The chances for ICERA are especially in the niche market: offering flexibility within a standard application. Also, the price is competitive: € 80,- an hour (€100-€120 an hour is normal). Most of the leads ICERA has are because of mouth-to-mouth advertisement. At this moment, ICERA has no export plans. In the future, this could be an option. ICERA develops its own products.
Mr. Den Engelsman has no experiences with outsourcing. However, ICERA has a partner that outsources within the Netherlands.
What is your opinion about outsourcing?
Much work is outsourced to India and Pakistan, because there are many highly educated persons. The problem is the time difference. Calling personally is only possible at specific hours of the day. Good communication is difficult, also because of language differences.
What are your first thoughts when thinking of a Mexican software developer?
Mexico is unknown for software development Why do they want to go to Europe?
Het is voor mij een onbekend land Mentality is different (mañana mañana)
What is the best way for INTECH to enter the Dutch market?
Be flexible with offering ICT specialists
Work in the same hours as in the Netherlands Offer competitive prices
Mr. Den Engelsman thinks that in the future, it is maybe possible to export his products to Mexico or other countries in (Latin) America.
Halve of the prices that are charged in the Netherlands are interesting. Important for the success of an outsourcing project is that the requirements are being met.
8
Summary of the interview with Mr. Van Wessel of Atos Origin
May 10, 2006
Atos Origin is an international ICT service provider. Key businesses are consulting, systems integration, managed operations and outsourcing of services.
Atos uses the following countries for outsourcing parts of projects:
India (level of education, availability, motivation, low costs, language) Maleisia (language)
Poland (geographic distance, low costs) Brazil (strategic time-zone)
China (strategic market)
Atos is always outsourcing small parts of projects like programming. The projects are always projects with a long duration, from six months till five years. The people abroad are officially Atos employees. The projects depend on the availability of resources.
The most important reason for outsourcing is costs. Further, a reason for outsourcing is the lack of specific knowledge. Also, focus on your own core business is a reason. Mr. Van Wessel has good experiences with outsourcing.
What are your first thoughts when thinking of a Mexican software developer?
Spanish language
Close to the United States
Do they have enough knowledge?
Low costs
Difficult to do business with because the different time zone
Atos is only outsourcing to the countries mentioned above. Mexico is not part of these countries. Therefore, there probably is no opportunity for INTECH
At Atos, there is a big shortage in good qualified ICT specialists with experiences. At this moment, there are a thousand vacancies. Solutions for this shortage are:
Train people
Hire fresh graduated people Hire people from abroad.
Mr. Van Wessel is called at least three times a week by headhunters. This is a very clear sign that the market for ICT specialists has indeed a big shortage.
Summary of the interview with Nora Cabello (Project Manager
INTECH)
March 2, 2006
At INTECH, Nora has 2 different roles: Project officer
Provisioning manager
As a project officer, she is responsible for assigning people to projects. Also, she has to make sure the Key Project Indicators (KPI) are being met:
Budget
Quality
Delivery Time
Customer Satisfaction
As a provisioning manager she has to make sure that there are enough people and competences to do the project. When Marketing is trying to sell, they go to her first to check if INTECH can do the project. Also, she makes the planning of the projects by means of the sales forecasts.
INTECH has experience with international projects, especially for Ericsson in the USA, Netherlands, Croatia and Guatemala. Also, INTECH has done some projects for the Government of Coahuila.
It is very important for the customer to know the working processes at INTECH. Of course, the people at Ericsson already know these processes because INTECH is a spin-off of Ericsson. But with other customers, you can see that they find it hard to understand the processes at INTECH. Therefore it is sometimes difficult to make good arrangements with them.
Why does INTECH want to go to the Netherlands?
They already have experience with The Netherlands
There are enough competences
The quality system is a huge advantage for INTECH
Nora thinks that the most difficult part would be the differences in culture.
What should INTECH do to have a successful business in the Netherlands?
When sending people to the Netherlands: first train them in Mexico, tell more about the cultural differences and technical differences there may be. Therefore, it is very useful to have a project manager in the Netherlands to act as an interface between the Dutch customers and the Mexican software developers. (Someone like Rob de Graaf for instance).
At INTECH, there already are a few people who have been to the Netherlands. Nora thinks that it is a good idea to send at least three people with Dutch experience to the Netherlands accompanied by people with no Dutch experience.
10
In Saltillo, it will be hard to find qualified people for the job. Of course, the job description is not easy (you have to have 3-4 years of experience, some certificates, TOEFL test, and you have to be willing to work abroad for a couple of months). Nora thinks that such people can be found in Monterrey and other cities in Coahuila. INTECH normally finds qualified people with the help of job offices and with help of advertisements in the paper.
Nora is confident that INTECH can deliver very good quality to Dutch customers and she also thinks that the Netherlands can be a good opportunity for INTECH.
Summary of the interview with Rene Chandler (Human Resources
Manager INTECH)
February 29, 2006
What are the competences of INTECH?
average age of software developers is 24 years average experience with Telecom is 5 years
average experience with multinational projects is 4 years
INTECH is busy giving every software developer some sort of experience level: A= little experience, can’t work without help
B= experienced, still in need of some help C= highly experienced, can work alone D= very experienced
Most of the people at INTECH are in B or C level of experience.
Rene thinks that the results on the vacancies research (see §4.4 in the thesis) are positive for INTECH: they have (or can get) enough people with the programming skills Dutch companies ask for.
All of the projects INTECH has done in the last years are in the area of Telecom. Projects are done for (for example):
Ericsson (Mexico, Guatemala, Netherlands, USA)
Telmex Mexico
Telcel Mexico
Intelligent network technologies = Telecom!
Rene thinks that the most difficult part would be to get the work permits; he thinks it would not be a problem to get the competences needed for the Netherlands.
