File this one under the heading "what goes around, comes around."
After a run of stunning good fortune, India's tech community finds itself dealing with a looming challenge from a flourishing Chinese economy. Just as American companies saw jobs disappear to less-expensive venues in India, China has begun to figure as an alternative for the practice of shipping tech tasks offshore.
The shift has not gone unnoticed by leading technology outsourcers in India, who are dealing with creeping wage inflation. As a result, some are fast
establishing a presence in China to remain competitive with their peers.
How big this trend will become remains unclear. Revenue from IT services is rising in China, but it is still barely half of India's $12.7 billion a year, according to a recent report from consulting firm McKinsey.
Part of the problem is a fragmented market, McKinsey said. And China faces other challenges, not the least of which is a lack of management talent.
CNET News.com recently spoke with Sudip Banerjee, president of enterprise solutions at Wipro Technologies, about the relative cost of software operations and other issues surrounding the future of outsourced tech work in China.
Q: What are the advantages and disadvantages of being in China right now? Banerjee: The advantages are twofold. You have a large labor supply pool like you have in India. The other advantage is that if you're dealing with customers or companies who have an Asian headquarters, there is a language and cultural advantage. (That is brought by) some of the Chinese, particularly in cities like Shanghai, which has bilingual engineers who speak both Japanese and Chinese.
In terms of the areas where they still fall short, I think one is the intellectual-property protection issue. The second is their English language capability, and the third is their lack of project management expertise.
Is there is a particular example of things going well in China? Have you been surprised at something working out where you didn't expect it to? Banerjee: I think they have very dedicated people. The programmers that you get there are very hardworking, very dedicated, and they produce content as good as anyone else. When we went there first, we were not sure what kind of output we would get, but we're very happy.
I think the challenge there is only in the project management area--project lead area or the specialized consultant area. But at the grassroots level, the attitude as well as the ability to do hard work and the quality of output--all that is very good.
People have a lot of misconceptions about China.
When you're talking about this dedication and quality, are these Chinese programmers and other professionals developing in computer languages using Chinese characters? Or English alphanumeric characters? How does it work? Banerjee: We only hire people who can do it in English, except where we have to do a local office implementation. So we do tend to get bilingual people. We have a requirement sometimes of people who know Chinese characters.
Can you give an example of a time when things didn't work out well? Or you ran up against an obstacle that you hadn't expected? Were there any intellectual-property scares you had there in China, for example? Banerjee: We ourselves haven't had those, because of the nature of work that we have done. We have not exposed ourselves in any area where it could be in trouble with IP. But I've lived in Shanghai, and I've met people, and they certainly do have those concerns.
What kind of steps have you taken to ensure your customers that they aren't going to be losing their intellectual property in China? Banerjee: We've made sure that wherever we've done work for our customers, only the local implementation and what was required was passed on. And we were doing that in a secure environment within our own development facility or in the customer's development facility.
We've treaded very carefully, I have to admit. We have just made sure that we have only the documentation which is required--not anything more.
Do you see the Chinese market as a place where you might expand given what seems to be pretty high wage inflation rates in India and high turnover? Can you speak about what those levels are right now that you're seeing at Wipro? And what is the corresponding information for the Chinese labor market? Banerjee: I don't see much of a difference. The turnover for Wipro this quarter--I think it's just under 10 percent. Having talked to people in Shanghai in the Pudong Software Park, which is like their version of Bangalore, you (find) pretty much the same range. It keeps fluctuating from company to company.
This whole notion of 'it might be cheaper to do work in China'--I don't believe that's true. The programmer cost (difference) between India and China--China is about 10 to 15 percent lower. But (when it comes to) the supervisory staff, project lead, project managers, etc., China is about 25 percent higher.
When you take a project and you do it on a 10-member team (or a) 20-member team, the net cost is the same. The other thing which you have to remember is that the Yuan currency is likely to get revalued at some stage. It's currently in a very artificial stage, and I think the U.S. will be the government which will really put pressure on China to get that Yuan revalued, because the U.S. economy is hurting as a result of the current evaluation of the Yuan. When that happens and the Yuan gets firmer, the cost of the local Chinese talent is going to be even higher.
I don't believe that there's going to be any advantage or disadvantage, from a salary perspective, in operating in China.
So I don't believe that there's going to be any advantage or disadvantage from a salary perspective in operating in China.
What is the wage inflation, wage increase rate, that you're seeing in India for programmers? Banerjee: In India, the total wages have risen up between 10 percent and 12 percent.
Ten percent and 12 percent annually? Banerjee: A 10 percent to 12 percent offshore wage increase. And I believe that that's going to be rising at the same level or a little higher in the next 24 months.
People have a lot of misconceptions about China. I think China is associated with low cost, at least in the software industry. I haven't found any evidence of that with any customer or anybody who has done any business there.
What is Wipro's presence in China? Banerjee: We have a small development center out of Shanghai...The plans are to have a beachhead from where we're able to implement software development activities for people who have a China (presence).
So it's not so much the India model of taking work from, say, a U.S. customer or European customer and doing that application development or integration work in India? Banerjee: No, we don't do that.
Do you have specific head count growth plans in China? Banerjee: Yes, we have an internal head count plan. But it's not really public. It's not in the thousands; it's in the hundreds.
This is the stuff that's being done for the China market predominantly, it sounds like. Banerjee: It's stuff not even for the local Chinese companies. It's for global companies who have a strong China presence, and plenty of large companies around the world now have very significant operations in China.
Do you see yourself as playing a role in consolidating the software outsourcing industry in China? Banerjee: We and some of the other top-tier Indian players are all in China. Everyone is kind of waiting and watching, looking at what's happening. The Chinese software companies are typically 200 to 300-person operations. They are not very large in size. I think (consolidation is) possible, but I think it will really depend on the nature of engagements that people have.
Can you give an example? Banerjee: If people's engagements lend themselves to getting large numbers of programmers, yes. If the nature of engagement is of the type that you have multisite implementations, then you may not be able to consolidate. Because what you don't have in China are companies in one location being very big. Let's say if we had a requirement of an implementation job which required 100 people, but in four different cities. It is very unlikely that we would get a company which has branches in four cities.
So they tend to be located in one region and pretty small? Banerjee: They are very fragmented, yes.
Is there also concern that it might be hard to move in and acquire a number of those companies because you run the risk of irritating or setting off alarms on the government's part? Banerjee: No. The government has come to India, they've met with large companies, and they want us to set up a large presence in China. We're actually there as a "wholly owned foreign enterprise." The advantage is that we're like a 100 percent-owned subsidiary, so we don't have to have a partnership with a local Chinese company. This is really an exemption granted to the IT services industry, and it's not very common.
Besides Chinese women are more olite than people from India. Chinese women will win in the long run plus they are nicer to talk to on the phone and well you know... Much much more prettier.
what difference do looks make? and even if looks counted for anything, its india that has won more miss world/ universe titles than any other country in recent times! methinks the guy who posted the comment has a fettish for oriental women- please stick to porn sites for comments/ stuff like that and keep silly coments out of sensible sites!
china's wage will eventually go up and the cost of making software will not be cheaper than it will be in india. i think wipro's decision to go into china is to have a secure foothold for itself when the local market grows to a scale comparable to japan or the usa.
India steals jobs from the USA. China steals jobs from India. In both cases all I care about is what is happening here. I could care less if Wipro falls flat on its face. I could care less if the India economy goes belly up.
I look around and see that no one is speaking up for the US workforce, so why should I give a rats behind about Wipro?
I am not a beneficiary of either outsourcing or offshoring. But, in reply to the post above, I have to say that instead of blaming indians "stealing" IT jobs from the USA, the bosses of U.S. big firms should be blamed for "selling" those jobs to overseas. Yes they are selling your jobs to India!!! If people tend to find a target to blame after they lost their jobs, then blame those bosses. Americans are excellent at finding a way to cut cost, therefore gain more profit. Indians would not have the inspiration to "rob" the U.S. IT force if their U.S counterparts did not conspire with them. We all wish God bless everyone equally, but in reality Gob only favour the strong. Whoever has the advantages wins the deal. It is why low end IT jobs are shipped to India or you may also say China, while high end research positions are still sit in the U.S.. One day I would lost my developer position as well thanks to the tide of outsourcing and offshoring, but I will never blame Indian for their "stealing", rather I will take my own advantage and catch up.
If poor people/country steals jobs from rich country, that's plausible. When it comes to China and India, when you said China steals jobs from India, I suggest you go to CIA site and find out yourself the basic numbers.
To the extent that the "Box" is not the Universe; and, with America's far more investments in space, communications and other technologies... the American Man/Woman with his/her ability for continuous learning and adaptation to his/her surroundings will continue to demonstrate their leadership in "light" years to come in God's Universe. And,(with all due respect to the people of all other countries around the world not fluent in the other languages other than their native tongues) God gave the American Worker as well as to the Indian Worker a special gift - Their "English Speaking" capabilities so that they can communicate with Him! There is but "one" race - Mankind.
"God gave the American Worker as well as to the Indian Worker a special gift - Their "English Speaking" capabilities so that they can communicate with Him! There is but "one" race - Mankind." I cant belive i read this!! So god told you he speaks english. hahaha
Show me a country like the US that has endured challenges like the Columbia and Challenger incidents and I will show you a country of the future. Again, some people should start thinking beyond the "box". Einstein's Theory of Relativity ( <a class="jive-link-external" href="http://www.drphysics.com/relativity.html" target="_newWindow">http://www.drphysics.com/relativity.html</a> ) as well as Schrodinger's Equation (<a class="jive-link-external" href="http://hyperphysics.phy-astr.gsu.edu/hbase/quantum/schr.html" target="_newWindow">http://hyperphysics.phy-astr.gsu.edu/hbase/quantum/schr.html</a>) gave us plenty of legacy. Countries like "India" and "China" can only play catch-up!
Yes it will take time...to catchup..but India and China are catching up fast..there is also a larger question here. Earlier threats to the Powerful Developing nations always came from within and they were more in terms of leaderships in quality manufacturing and R&D. This is the first time a strategic turnabout has happened with the leadership in Technical areas, and services coming about from Developing nations like India and China. This is a defining time and as History has taught..never underestimate!
Inches of rain in new orleans due to hurricane katrina... 18.0 Inches of rain in mumbai (July 27th).... 37.1
population of new orleans... 484,674 population of mumbai.... 12,622,500
deaths in new orleans within 48 hours of katrina...100 deaths in mumbai within 48hours of rain.. 37.
number of people to be evacuated in new orleans... entire city..wohh number of people evacuated in mumbai...10,000
Cases of shooting and violence reported in new orleans...Countless Cases of shooting and violence reported in mumbai... NONE
Time taken for US army to reach new orleans... 48hours Time taken for Indian army and navy to reach mumbai...12hours
status 48hours later...new orleans is still waiting for relief, army and electricty status 48hours later..mumbai is back on its feet and is business is as usual
USA...world's most developed nation India...third world country..
I guess the guy who posted the above comment is still not out of the school and not aware of many facts. FYR click the link below and get to know what Indians have given to this world. Indians gave 'Zero' to world so that you can play with binary programming and count the value of millions and billions.
If jobs are being outsourced to India, it is because of cost-effectiveness and skillsbase. Still core jobs are not outsourced or they are just sourced to local US companies. Better prepare yourself to be fit to perform on core jobs. Else you may see that even core jobs are moving out.
I beg to differ about the project management capabilities in China. This is a skill set that is rapidly increasing in China. China will in the next few years catch up to India in the number of companies that are CMM certified. I believe they are in the top three already. Not that, that is the only measure but it is a good one. PMI certifications are on the rise there. Companies there are taking an active role in CMMI process improvements. China is already a strong player in the software development and it will only increase. What country in just won the award college programming olympics? China.
In the U.S. and Europe, I think we tend to worry too much about China. "How will we be able to compete against such a behemoth?" we cry in despair. "China has 1.28 billion people!"
But consider the demographics. First, the U.S. (plus territories) has 0.29 billion and is becoming closely integrated economically with Canada and Mexico, adding another 0.13 billion, for a total of 0.42 billion. That's about 1/3 of China's population. The EU is roughly the same size, at 0.47 billion. So China is large, certainly, but not quite a behemoth. Second, the neighbors of China, including Russia (0.15 B), Japan & Korea (0.20 B), Indonesia (0.22 B), southeast Asia (about 0.20 B), and of course India (1.08 B), can be counted upon to not want China to become an uncontrolled economic or military monster. Just these add to 1.85 billion, and I've left out some. Lastly, there are other regions/countries of the world that are becoming modernized. These are more likely to be sympathetic to the U.S. and the EU than to China, which will further keep China's behavior in check. Example countries are Brazil (0.18 B), Philippines (0.08 B), and Nigeria (0.14 B).
Indeed, hegemony by China would be opposed by no less than 3 billion people. That's a behemoth.
Perhaps it is time that the nations that make up the other three billion or more people who live on Planet (3) formally address the question of the establishment a "Federation Star Fleet"!
you can pretty much outsource all business functions these days, but it's still difficult to find a good way to manage the relationship with the outsourcing firm. Some firms use outsourcing as a way to supplant workers until the economy gets better. Here's an article that has some useful information about that, at least when it comes to technology outsourcing.
Web giant is spending $120 million to beef up its Mountain View, Calif., headquarters, according to filings with the city reviewed by the San Jose Mercury News.
The Samsung Galaxy mini 2 S6500 could make its debut at the Mobile World Congress in Barcelona later this month, according to a leaked promotional image.
Tor's "obfsproxy" technology would make encrypted data look innocuous and let it dodge government censors. That could help citizens in Iran reach blocked sites as antigovernment protests reportedly loom.
MIT creates a simulation to celebrate the 50th anniversary of Spacewar. A relic of the early days of minicomputers, it was one of the first computer video games and set the stage for many others, including Asteroids.
George Lucas has just released his version of "Star Wars" in 3D, but c'mon--the guy believes Greedo shot first. Why not make your own Star Wars world? In the first installment of a Crave series, a crack team of crafters fight the power and turn paper bags into the Rebel Alliance's Admiral Ackbar. It's a sack!
So My bet is on China.
I look around and see that no one is speaking up for the US workforce, so why should I give a rats behind about Wipro?
I cant belive i read this!! So god told you he speaks english. hahaha
This is the first time a strategic turnabout has happened with the leadership in Technical areas, and services coming about from Developing nations like India and China.
This is a defining time and as History has taught..never underestimate!
Inches of rain in new orleans due to hurricane katrina... 18.0
Inches of rain in mumbai (July 27th).... 37.1
population of new orleans... 484,674
population of mumbai.... 12,622,500
deaths in new orleans within 48 hours of katrina...100
deaths in mumbai within 48hours of rain.. 37.
number of people to be evacuated in new orleans... entire city..wohh
number of people evacuated in mumbai...10,000
Cases of shooting and violence reported in new orleans...Countless
Cases of shooting and violence reported in mumbai... NONE
Time taken for US army to reach new orleans... 48hours
Time taken for Indian army and navy to reach mumbai...12hours
status 48hours later...new orleans is still waiting for relief, army and electricty
status 48hours later..mumbai is back on its feet and is business is as usual
USA...world's most developed nation
India...third world country..
Oops...did i get the last fact wrong???
--------
Learn to know the keyboard first :)
http://www.scribd.com/doc/25581280/India-s-Vedic-Scientific-Heritage
If jobs are being outsourced to India, it is because of cost-effectiveness and skillsbase. Still core jobs are not outsourced or they are just sourced to local US companies. Better prepare yourself to be fit to perform on core jobs. Else you may see that even core jobs are moving out.
But consider the demographics. First, the U.S. (plus territories) has 0.29 billion and is becoming closely integrated economically with Canada and Mexico, adding another 0.13 billion, for a total of 0.42 billion. That's about 1/3 of China's population. The EU is roughly the same size, at 0.47 billion. So China is large, certainly, but not quite a behemoth. Second, the neighbors of China, including Russia (0.15 B), Japan & Korea (0.20 B), Indonesia (0.22 B), southeast Asia (about 0.20 B), and of course India (1.08 B), can be counted upon to not want China to become an uncontrolled economic or military monster. Just these add to 1.85 billion, and I've left out some. Lastly, there are other regions/countries of the world that are becoming modernized. These are more likely to be sympathetic to the U.S. and the EU than to China, which will further keep China's behavior in check. Example countries are Brazil (0.18 B), Philippines (0.08 B), and Nigeria (0.14 B).
Indeed, hegemony by China would be opposed by no less than 3 billion people. That's a behemoth.
http://www.startechglobal.com/blogs/2009/07/19/technology/layoffs-in-it-and-engineering/