Russia’s invasion of Ukraine could hurt Europe IT outsourcing | #microsoft | #hacking | #cybersecurity


Hello and welcome to Protocol Enterprise! Today: how the war in Ukraine has caused some companies to rethink their global IT outsourcing plans, Microsoft jumps on a security service bandwagon, and the latest investments in enterprise tech startups.

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Multicloud computing remains a topic that more people are talking about than doing, according to new research from Next Pathway. While more than half of survey respondents think running workloads across multiple infrastructure cloud providers is a good idea, 45.2% want their cloud providers to help them, and 40.2% are worried about inter-cloud connectivity affecting performance.

Not quiet on the Eastern front

The global market for IT services has exploded in line with the overall growth of tech, which has become a $4 trillion dollar industry. Finding the talent to meet the growing demand for technical services is more difficult than ever, which has driven companies to hire IT employees across the globe, outsourcing to countries like the Philippines, India and, increasingly in recent years, Ukraine, Poland, Bulgaria and other Eastern European countries.

Everything changed for Eastern Europe’s IT services industry on Feb. 24, when Russia invaded Ukraine and started a war that has claimed the lives of more than 3,000 Ukrainian civilians, according to the United Nations. With no end to the war in sight, Europe’s tech sector is under pressure to maintain its reputation as a hot source of IT talent.

Demand for that talent has not slowed: It’s no secret that companies across the board are having difficulty finding the right people.

  • “There is absolutely a dearth of skills available in certain countries,” said Kerry Hallard, CEO of the U.K.-based Global Sourcing Association. “In the U.K., I think we’ve got something like 1.2 million open jobs at the moment of which over 100,000 of those are in technology, in software development in particular.”
  • While the recent history of enterprise tech has centered on automating as much of the work as possible, there’s a limit.
  • “When you think about software, you’re primarily talking about talent because we don’t make products,” said Sanjay Brahmawar, CEO of Germany’s SoftwareAG.
  • “The pool of people that are available in developed countries is not enough to meet all the demand,” said Prasad Vuyyuru, a partner at Infosys, which is based in India.

The IT services market as a whole is now more than a trillion dollars in size, said Gartner Senior Research Director Brett Sparks.

  • And although outsourcing has been going on for a long time, the pandemic helped kick-start the “delivery of IT services from remote locations,” said Gartner Research Vice President Alan Stanley.
  • And as companies began to spread their nets wider, they began to look to new countries to source their IT services, he said.
  • “I think one of the things that the pandemic has taught companies is that you can’t have everything in one basket,” said Hallard.
  • When India — which is a major outsourcing location for companies based in the U.K. — got hit especially hard during the pandemic, companies had nowhere else to source the work, she said. That led companies to expand their global footprint so that “if one destination is taken out, they know that they’ve got a fallback,” said Hallard.

Initially, companies focused primarily on countries like India or the Philippines for their outsourcing needs, said Vuyyuru.

  • Now almost every company has a base in India or the Philippines, he said, noting that companies like Accenture and IBM have just as many employees in India as Infosys does.
  • Still, there are limits to how much talent is available in any one country, which has driven companies outside of those traditional regions.
  • “For example, they’ve gone to Eastern European countries, because the advantage with Eastern European countries is they also generate a lot of engineers,” he said.
  • Even Poland, which is becoming a strong software development hub in its own right, is now outsourcing to neighboring countries, Hallard said.

Demand for European talent in particular has increased because of the region’s strength in high-demand IT skills. But as more companies deploy global talent models that increasingly leverage IT employees from Europe, geopolitical risks like the impact of the Russian invasion of Ukraine become even more paramount.

  • “That’s the reason why, for example, East Europe, they have been slow on the uptake, because of some of these geopolitical risks,” said Vuyyuru.
  • Pakistan and India are illustrative examples of that. Although the two countries have similar talent pools, “Pakistan has not done as well as India or Philippines has done just because [of] the political uncertainity, the political as well as the terrorism part of it, the security,” he said.

Political, security and economic risks are why business continuity planning is essential for enterprises still using talent in Europe in the midst of the war.

  • While the risks are higher to use talent in impacted countries, Stanley noted that enterprises “could put in place obligations, backup plans, contracts in order to manage and mitigate the risks that are there.”
  • But as companies cancel contracts and agreements in Eastern Europe, it will affect outsourcing to the region for the next several years at least.
  • Still, despite these challenges, industry experts like Hallard don’t think outsourcing to Europe will slow down in the long run.
  • “I don’t believe [the war is] going to have a long-term impact on a company’s appetite to outsource or offshore because, basically, they haven’t got a choice,” she said.

— Aisha Counts (email | twitter)

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Microsoft wants to run your security

Microsoft announced three security services Monday that it says are a response to the ongoing shortage of cyber talent — including a consulting service aimed at enterprises and a managed offering in the fast-growing area of extended detection and response (XDR).

Rob Lefferts, corporate vice president for Microsoft 365 Security, said that the need for more services from Microsoft to augment short-handed security teams is the No. 1 topic he hears about from chief information security officers. “People really want help,” Lefferts said in an interview with Protocol.

That prompted the launch of the new suite of services, dubbed Microsoft Security Experts. With the exception of a few enterprises that run the “biggest and best” security operations centers in the world, Lefferts said he believes customers are currently looking for the type of security assistance that these services seek to offer.

The new services include Microsoft Defender Experts for XDR, which is the first managed version of Microsoft 365 Defender, the company’s XDR platform, according to Lefferts.

An emerging product area within cybersecurity — Gartner expects 40% of organizations to use XDR by 2027, up from 5% in 2021 — XDR systems correlate data from numerous security tools and environments in an attempt to provide enhanced threat detection.

— Kyle Alspach (email | twitter)

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Marvell acquired Tanzanite Silicon Solutions for an undisclosed amount, hoping to bolster its product lineup for the data center with Tanzanite’s memory-scaling chips.

Google Cloud employees feel their company has turned into a version of Oracle or SAP, according to Business Insider, three years after Google hired 22-year Oracle veteran Thomas Kurian to lead the group. Who could have seen that coming?

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