[IP] more on China catching up in outsourcing business?]
Begin forwarded message:
From: Suresh Ramasubramanian <suresh@xxxxxxxxxx>
Date: July 18, 2004 3:21:10 PM EDT
To: dave@xxxxxxxxxx
Subject: [Fwd: [india-gii] China catching up in outsourcing business?]
Just two points I'd like to make here ...
Q. What do the Japanese think about China's emergence?
A. Being in Japan recently, what I saw were quite a few of the systems
integrators, such as NEC, Fujitsu and Hitachi, beginning to open very
large outsourcing contracts with China, not India.
Japan and the surrounding countries are culturally / language wise much
closer to China than they are to India.
India's english speaking skills are far less useful in this region, and
while I know several Indians who are fluent in French or German, it's
really rare to find a chinese or japanese speaker.
That said, there are a whole lot of Indian companies doing business in
China (IT training, outsourcing, software development). Conversely,
there are a bunch of Chinese companies, such as Huawei Technologies, a
Shenzhen based maker of networking equipment, that outsources a lot of
its work to Bangalore, India, and also employs several hundred Indian
engineers at its Shenzhen campus.
BTW, Shenzhen has only one Indian restaurant that I'm aware of, and
needless to say, it is rather popular with the Indians working for
Huawei.
China is using their muscle to say, "Hey, Mr. Microsoft, or Hey, Mr.
Borland, if you want to sell to our companies or our government, you
have to be based here." That will accelerate China's growth.
Isn't there something in one of various WTO agreements about this sort
of thing?
-------- Original Message --------
Subject: [india-gii] China catching up in outsourcing business?
Date: Mon, 19 Jul 2004 00:36:20 +0530
From: Arun Mehta <arunlists@xxxxxxxxxxxx>
Reply-To: Arun Mehta <arunlists@xxxxxxxxxxxx>
To: India-Gii <india-gii@xxxxxxxxxxxxxx>
How a Technology Gap Helped China Win Jobs
By WILLIAM J. HOLSTEIN
NYT July 18, 2004
CHINA is challenging India as a low-cost home for software development.
In the process, says Dale L. Fuller, president and chief executive of
Borland Software in Scotts Valley, Calif., the technology industry is
becoming ever more globalized. Following are excerpts from a
conversation with him:
Q. Is India still the country where Western companies look when they
outsource technology work?
A. It is clear today that India has the leadership, in terms of market
share, for software development and outsourcing. The reason for that is
that they had an early jump start. They began by being more Westernized
and having more English speakers. A lot of guys who came over here from
their institutes of technology and got trained here have now gone back.
A lot of the start-ups during the Internet bubble were Indian, and a
lot of the resources here in Silicon Valley were the holders of H-1B
visas, who also transferred back after the bubble burst.
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Q. But the Chinese are catching up?
A. Over the past couple of years, we've seen China really put the
pressure on by bringing their skills sets up. They have the language
barrier. But their president made the statement that everyone will be
speaking English within 20 years. They're making some really big
strides.
Q. What do the Japanese think about China's emergence?
A. Being in Japan recently, what I saw were quite a few of the systems
integrators, such as NEC, Fujitsu and Hitachi, beginning to open very
large outsourcing contracts with China, not India.
Q. Is it a question of costs, or do Chinese workers have some skills
that are in particular demand?
A. China is a little bit lower-cost than India. But I don't think that
will last for long. Both countries have what we would classify, over
the next 10 to 20 years, as inexhaustible sources of human capital.
Q. Are both countries basically in the business of writing code, or of
something more sophisticated than that?
A. Between the two cultures, there are some distinct differences. One
is that we see more and more services going into India, the complete
service, everything from consulting services to a full customer center
where you have your phone systems set up with people answering them.
It's all tied together. Having been established for a while, the
Indians have a methodology and a process that's very familiar to those
of us in the Western world. China hasn't really used that and is just
now beginning to adopt it.
Q. Does China's very different political system help it compete against
India?
A. China does have a lot more resources subsidized by the government.
For example, it is doing something unique to accelerate its ability to
compete against India. They are publishing a list of the authorized
software that any Chinese-sponsored agency or company that is
subsidized can buy. If you want to do business in China, you have to
have a development arm in China to build your applications or your
software. China is using their muscle to say, "Hey, Mr. Microsoft, or
Hey, Mr. Borland, if you want to sell to our companies or our
government, you have to be based here." That will accelerate China's
growth.
Q. Does China have any other advantages?
A. India has processes and methodology from the 90's. It's old. China
gets to look at all the mistakes of the Indian outsourcers and learn
from them. And China gets to use the new technology that we and others
have developed over the past year, but India is handicapped. China did
the exact same thing with wireless technology. They were so far behind
that they said: "We're not going to lay copper lines all over China.
We're going to go wireless."
So they are closing the gap. They will catch up. They are three to five
years away.
Q. Are software development jobs moving from the United States to these
other places, or are companies adding positions offshore?
A. Over the 2001-03 time frame, we saw a significant decrease in the
head count within U.S. organizations because of cost controls. I don't
believe those jobs are coming back. There are clearly not as many
developers employed in the U.S. today as there were three years ago.
But you have to remember that if there are 600,000 or 700,000 very
well-trained staffers in India, that still pales in comparison with the
almost three million jobs in North America.
Q. Isn't some of this work too complicated to be outsourced or
offshored?
A. Yes, the environments are more complex.
Q. What do you mean by that?
A. That means there are multiple platforms, or different kinds of
computer systems, and they have to work together. It's a lot more
complex. The notion that you can make all that work well together by
taking your secret sauce and giving it to someone else just doesn't
make sense.
Q. Is the American educational system doing a good job of producing the
caliber of workers that technology companies need?
A. We have an amazing educational system, by far head and shoulders
above anywhere else. The unfortunate part of that is that while it
attracts talent from all over the world - people fight to get into our
universities - most graduates with engineering degrees are foreign
nationals and they don't stay here. One of our biggest exports is the
education of our competitors.
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