Could China be about to reduce India's offshore IT dominance?

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China offers a deep pool of IT talent. This talent is available at relatively low cost. Some would say very low cost.

I am trying to keep up to date with what's available in China and news of another official UK office for a Chinese service provider is worth a post.

It is interesting because China has the potential to become like India in IT services. These days an Indian IT company is never absent from a CIO wish list. But can China do it without an event such as Y2K.

Back in May I blogged about a company called Bleum. This is an offshore software development company based in China but managed and owned from the US. 

China has 350,000 computer science graduates every year and they cost less than their equivalents in India.

Now there is another Chinese company setting up in the UK. VanceInfo Technologies  , as it is known, is a software development firm based in China and is opening a UK office next month as it targets UK customers.

It already boasts Microsoft as a customer and has 300 software developers working in China for Microsoft. It also supplies companies including IBM, TIBCO, HP, EMC, NEC, Mitsubishi, Huawei, Lenovo, ABB and 3M.

For example it provides software development and system integration and is moving into the BPO space.

It has the developers in China but project management will be done from the region the customer is in. VanceInfo Technologies was set up and is run by Chinese Americans.

Its UK focus is in the financial services, media, technology and mobile as well as fixed telecom. It will design, develop and implement software and provide maintenance services. It will also provide ERP, CRM, supply chain management, IT integration and system support and maintenance.

 

Just to remind you this is Bleum, the company I mentioned at the top of this blog:

The company is 10 years old and is run by American Eric Rongley.

It has about 1000 staff in Shanghai and a handful in the US and Europe to manage the company and support certain accounts.

The main applications it develops are e-commerce, financial services, supply chain and retail. Walmart has an e-procurement system from Bleum.

Bleum has a policy that all staff to speak English while at work.

It uses biometric security to protect its different locations. Each customer will have a physically separate support centre.

Its recruitment process is rigorous. It gets 2000 applicants every month and takes on only about 50.

It has a four stage recruitment process.

1 - Candidates must reach 140 in an IQ test.
2 -There is a skills test and people are chosen depending on the demand for particular skill
3 - Candidates must speak a good level of English.
4 - Then there is a behavioural test.

If you are a Chinese service provider please contact us and tell us what you've got. Also if you are a customer of a Chinese company tell us about your experience.

 

5 Comments

The numbers of graduates being produced in China is certainly impressive, however there is in my view a real lack of project management experience as well as difficulties with communication and a lack of legal remedies available within China. China also needs to develop its own equivalent of NASSCOM in order to provide a coherent message promoting the IT industry in China. I think China still has a long way to go to catch up to India, although no doubt the potential for this to happen is certainly there.

The graduate production-line in India and now China is powerful, but when we consider the critical success factors of the modern software development project team, technical skills are only part of the picture.
My experience of working with Indian graduates and those with a few years of experience is that they have been educated well in technology, but their awareness of how to work as part of a collaborative, incremental and self-organising team is extremely poor.
Universities still seem to be teaching "waterfall" approaches to command-and-control project management, which still dominates the software industry in India.
For China to overtake India, it will need to be not just as good as India, but better. Better at communicating, collaborating and managing their work in conjunction with their colleagues and clients in the West.
This will take time, but can be achieved, as long as the right education and cultural alignments can be put in place.

Julian Holmes
UPMentors.com

China already outsources IT services and outcompetes India in the Japanese, Korean, and Taiwanese markets. It's a matter of language, being able to speak English doesn't help you in those markets.

china software is much better than india
china is mainly focus on its own market
india only export

Julian Holmes: "My experience of working with Indian graduates and those with a few years of experience is that they have been educated well in technology, but their awareness of how to work as part of a collaborative, incremental and self-organising team is extremely poor. Universities still seem to be teaching "waterfall" approaches to command-and-control project management, which still dominates the software industry in India."

This echoes my own experience of working with onshored Indian staff or on partly offshored projects. I think this is actually part of the large-scale IT offshoring paradigm. In order to maximise profits, you need to be able to deliver software using the cheapest staff available, which tends to be inexperienced graduates. But if you're using inexperienced staff, you need to spell out very clearly what you want them to do. Although everybody talks "agile", the reality is that many organisations are forced to resort to near-waterfall-style development, because they have to nail down the requirements and specifications in great detail before these are passed over to the offshore Indian graduate trainees (or increasingly the onshored Indian graduate trainees)for implementation. The clear aim is to de-skill software development as far as possible precisely so that it can be undertaken by relatively unskilled and inexperienced - but cheap - staff. Also, communication barriers - language, time-zones, cultural differences and contractual interfaces between organisations - all contribute to reducing the scope for pro-active collaboration between onshore clients and offshore suppliers. This combination of factors means that it can be hard to find the kind of experienced, agile, flexible, pro-active development staff you need at the bargain basement prices you may be seeking. India has a lot of IT people, but they're serving a global market and they are still relatively inexperienced in many areas of IT, so it seems likely that in many cases there is a "skills shortage" in India. Unlike the UK these days, perhaps, where there are thousands of experienced IT workers looking for work!

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This page contains a single entry by Karl Flinders published on August 20, 2010 9:18 AM.

Are IT services deals increasingly moving onshore? was the previous entry in this blog.

Can the UK government really offshore tens of thousands of jobs? is the next entry in this blog.

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