Niche Specialization as a Strategy in the Multisourcing World

May 31-June 02, 2006 – At the sixth Russian Software & Outsourcing Summit, Axmor Software announced their decision to focus on J2EE and WebSphere business integration solutions as a niche specialization, addressing the global trend of “multisourcing” widely discussed by invited experts.

From the standpoint of Forrester Research, the current key trend in the outsourcing industry involves a significant shift from cutting down software development costs to benefits that specific expertise provides. More and more companies now prefer to multisource, selecting those providers that possess strong skills and solid experience in various particular fields.

Searching for ways to increase their competitive role was not an easy task for Axmor Software – nor was it for many other small Russian companies of 100 employees or less.
As analysts pointed out, Russia and India can compete neither in project scale nor in prices.
While large-scale projects have always been a prerogative of larger-sized Indian providers, Russia is particularly rich in small companies with highly skilled developers who possess strong engineering backgrounds and abilities to effectively utilize their specific skills in the development of innovative solutions.
From the analysts’ point of view, specializing in niche technologies may provide Russian companies with an excellent opportunity to excel in the international software market.

The majority of Russian companies work with the whole range of key technologies, providing miscellaneous solutions to their customers; the decision to specialize in a particular field is not easy to make.

Axmor decided to focus on their extensive experience in working with IBM, their expertise in business integration solutions, strong background in Java/J2EE and WebSphere, and the ability to use a great variety of emerging technologies to provide innovative solutions.

At B2B meetings with Axmor, companies looking for outsourcing vendors emphasized the strong focus that differentiates Axmor from other software developers. The chosen strategy proved to be successful, as potential customers displayed their genuine interest in Axmor’s unique expertise.

One more advantage of working with a niche solution provider valued by prospective outsourcers is exclusiveness. A larger customer outsourcing for specific skills and a niche solution is predominantly positioned within the provider’s 5 major clients.

Companies having chosen niche specialization still face some problems on their way. Research, Datamonitor, EOA, and other analysts emphasized a trust-related problem as a major negative factor of Russia being underestimated as a competent software solution provider.
Companies may overcome this problem by developing business communications with the Western world and improving their images and brands.
Axmor is effectively working in this direction by providing their customers with high-standard communications and technical support within each project frame.

Still, it is extremely important to effectively clue in our potential clients on niche solutions we provide.
Forrester Research pointed out “increasing visibility” and Stan Gibson from eWeek also mentioned such vital aspects as “global traveling and networking.”
Since small providers do not have vast opportunities to frequently meet their clients, potential customers often find it hard to search for the right vendor.

As a matter of fact, only a few potential clients had a chance to visit the summit. The participants pointed out frequent business meetings as being costly since travel expenses normally exceed the size of the contracts between Russian providers and their foreign clients.
On the other hand, companies need to try and get over this barrier to establish effective long-term collaboration.
As part of their strategy, Axmor is planning to take an active part in overseas events to meet their clients in the UK and the US.

Axmor believes that niche specialization is the key to establishing mutually beneficial relationships between solution providers and clients interested in strong solutions targeted at the their specific needs, with quality and high communication standards being the main priority.