IT nearshoring has become a popular trend in the last decade. It is now common for companies to outsource IT-related activities, such as software development, customer service or product design, to software engineers in other countries. The main reason why this type of outsourcing is becoming more and more popular is because it allows organisations to focus on their core business while reducing costs by taking advantage of lower labour rates abroad.
In Belgium, IT nearshore services are prevalent due to its many tech firms and rising shortage of skilled workers. This article aims at introducing nearshore digital transformation, business processes, and software development in Belgium and some key challenges that need tackling before this practice can take off fully there.
The state of the IT market in Belgium
Belgium’s IT market is strong by some measures. The country boasts a large talent pool of some 230,000 people in the industry with an average salary of €37,500. But by other measures it lags behind neighbouring countries like France and the Netherlands on funding, venture capital investment, company growth and labour productivity.
The Belgian government has also passed various regulations to help promote advancement in the ICT sector. These regulations will help stimulate innovation in the industry. The country is very committed to developing ICT. A major part of this commitment was made quite recently in April 2015, when the government launched its Digital Belgium agenda for the following five years.
This strategy outlines how to improve the innovation capacity of Belgian companies and institutions in ICT. In order to achieve this goal, it has been decided that new infrastructure will be built and connectivity provided to all areas of Belgium by 2020
Currently, 92% of the country has access to 4G, with 100% of the population having access to the internet.
Belgian demand for ecommerce is strong. However, they also have to meet the demand of two languages (French and Dutch) in addition to meeting local laws and culture. Conversely, there is a cross-border opportunity for businesses since Dutch and French eCommerce platforms have had limited success.
The country has a low output of graduates in STEM. This is a concerning barrier to growth and innovation for the country and it’s already starting to create issues with some ICT functions such as job vacancies involving specialised skills. One example was that over 50% of jobs requiring specialised ICT skills were left unfilled for over six months between 2017 and 2018.
This gap is anticipated to rise from about 8,000 individuals in 2012 to around 30,000 people in 2021 for the ICT workforce alone, which is comparable to other European countries. The government is also noticing this problem as they passed various regulations to help promote advancement in the ICT sector such as increasing investment in infrastructure and connectivity, as well as providing grants for startups, training, and innovation competitions.
Belgian internet security lags behind as well. In a poll by the internet security company, Rapid7, it was found that Belgium has the least secure networks of the 50 countries they surveyed. It is also worth noting that Belgian SME companies without CIOs said that they are not targeted due to their lack of valuable information needing to be secured and no connection between network security and turnover rates.
Increases in cyber-attacks like WannaCry are causing many Belgian SMEs to start addressing their network’s cybersecurity vulnerabilities. The government has also passed various regulations to help promote advancement in the ICT sector which will help with the issues concerning IT workers in Belgium with its high demand for STEM graduates, low output of graduates in STEM, and the low number of network security specialists in the country.
Current outsourcing situation in Belgium
Belgian companies who resort to outsourcing do so in order to provide a way for them to save costs, improve core expertise, and increase their international competitive advantage, which is the main reason for IT outsourcing. Companies might also choose IT nearshore outsourcing in order to be able to focus on other aspects of the business, such as marketing or research and development.
Enterprise Resource Planning (ERP) is the goal of most of the renewal budgets. ERP covers procurement, procurement, procurement planning, materials management and accounts receivable. Security, app development, and ICT Infrastructure are also goals for many companies’ renewal budgets.
The main drivers for outsourcing are as follows:
- Lack of personnel within the organisation.
- Change in technology requirements that happens too fast for the company to follow or be able to offer new online solutions.
- The need for an IT organisation to be able to quickly expand or reduce capacity within their own company without having to lose time and money by training people from scratch, hiring additional staff, etc.
Why nearshore software development can be a solution for Belgium
Nearshoring provides a way for companies to be less expensive and more competitive. They can also focus on other aspects of their business, such as marketing and research and development, which will hopefully lead to the creation of jobs for workers in those areas.
Nearshore outsourcing a software project to a dedicated team from Central and Eastern Europe is a solution specifically tailored to meet the needs of IT organisations. It provides access to knowledge that they don’t have as well as the knowledge they need in order to be able to offer new online solutions. Nearshore outsourcing also helps with flexibility for companies by allowing them to rapidly expand or reduce capacity within the company without having to deal
with issues that would come from training employees from scratch or hiring additional staff for each business process or software development project.
IT workers in Belgium, nearshoring will help with the issue of IT companies not being able to find qualified staff. Nearshoring can also help decrease costs for companies due to it being more affordable than having employees on-site and provide better working conditions for employees by giving them better salaries during the development process. On top of that, with additional workers, you get a shorter time to market.
The shortage of ICT infrastructure specialists in Belgium is another problem that will be helped by nearshoring which will allow these seasoned professionals to continue their expertise while still receiving a competitive salary. Start nearshoring if you want an experienced IT company or business partner!
Sources:
https://www.privacyshield.gov/article?id=Belgium-ICT-Services
https://cdn2.hubspot.net/hubfs/2655225/Belgium%20and%20Netherlands/04%20-%20E-books/Cegeka_Ebook_MarktonderzoekOutsourcing_English_new.pdf