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Tuesday, July 19, 2005

Enterprise IT Services & Outsourcing : Gap Between India & China Widening

We had been covering for some time different perspectives about the myth of the rise of chinese companies IT services and its future potential, wherein we covered wide topics China : resource scale-up disappoints, Chinese threat - years away, Indian headquartered company shall rule the IT Services market, China is far from the promised land. David Scott Lewis, president of IT-Estrategies has amazing insights about the chinese companies & their future potential and in equal measure about the chinese domestic market & infrastructure - My personal views are almost identical - absolutley on the dot. Excerpts & Key Insights from DSL views from Sandhill.com:

- The gap between China and India is not narrowing, it's actually widening, especially as the Indian globals and even Tier 2 firms move up the food chain and create new practices, such as verticals and strategy consulting practices. Chinese firms are trying to figure out what UML is; the Indian globals are launching practices to challenge IGS and McKinsey.

- It's often said that in software development China is only five or so years behind India and is catching up at a breakneck pace. Not true, as least not in the enterprise software or IT outsourcing sectors. In many consumer-related apps China may be ready – but the enterprise software market and the consumer software market are two different realities.

- In the offshoring world, even if India, Inc. were to sit on its hands for the next five years, there are too many reasons why it will take much more time for the domestic (in China) firms to mature to the current level of even the Tier 2 Indian IT outsourcing firms. For example, with very few exceptions (although there are exceptions), the domestic firms simply don't have a chance to build enterprise-class capabilities.

- Often the enterprise-class Chinese domestic contracts go IBM Global Services (IGS) - the majority of the contracts let for enterprise software applications integration go to a handful of companies. The Indian globals are also pursuing this space. Chinese firms might get a bit of custom applications development for a F500 company, although even this is rare. But it's a big jump from custom apps work to packaged apps integration. Java coding to a 150 page spec is not the same as integrating i2 with Siebel.

- Realities : Political & Cultural shall come in the way of China getting project management skills to manage large projects - China acknowledges India's superiority in software, but in reality, won't learn very much from India, Inc., sans NIIT training centers.

- China, Inc. does not compete against India, Inc., at least not in the IT outsourcing sector. For manufacturing, two thumbs up to China; for IT outsourcing, well, you've got to be kidding. China's best solution providers can play ball with their Tier 3 and Tier 4 counterparts in India, especially as China's best expand their development centers to Tier 2, 3, 4 and 5 cities within China, thereby having a significant cost advantage versus the Indian firms.

- In Asia, China faces only two competitors: Malaysia and the Philippines; China's solution providers can hold their own against the East Eastern Bloc. And this is the real opportunity: development. China can do better - and does do better - than low-level testing and localization. For custom apps, come to China compared to the East European States.

The more and more I read and reread this and reflect upon what is said - it is more and more clear - amazing insight and absolutely the correct view despite all the noises that we hear form a plethora of sources.

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ThinkExist.com Quotes
Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
"All views expressed are my personal views are not related in any way to my employer"