[ppi] [ppiindia] America faces a two-headed software dragon

** ppi-india **
 Commentary: America faces a two-headed software dragon
  Andy Mukherjee Bloomberg News Wednesday, March 17, 2004


China has put together a software industry group it unofficially refers to
as "Long Tou," which in Mandarin means "Dragon's Head." The name couldn't
have been more appropriate.
.
Just as a dragon's powerful head leads the rest of its long body into
battle, the 50-company group set up by the Science and Technology Ministry
in Beijing will guide China's low-wage onslaught into computer software.
.
If the China Offshore Software Engineering Project, as the group is formally
named, succeeds, hundreds of smaller companies could follow.
.
Forrester Research has forecast 3.3 million U.S. service-industry job losses
between 2000 and 2015. If China becomes a strong competitor for those jobs,
the number could go higher.
.
The question is, "Can Chinese software makers do it?" For a possible answer,
look at what makes Indian software companies so successful.
.
Indian software developers typically have 60 percent to 70 percent of their
people in India, where programmers earn a sixth of what code writers charge
in the United States. The remaining 30 percent to 40 percent of employees
work in the United States and Europe, where they bid for business and manage
projects. The geographical dispersion of the work force leads to a 24-hour
workday.
.
How do we know the Indian model works? Net income at Infosys Technologies,
India's No.2 software exporter, was about $12,850 per worker in the year
that ended March 2003.
.
In comparison, net income per employee at Plano, Texas-based Electronic Data
Systems, the world's No.2 seller of computer services, was $8,150 in 2002,
according to Bloomberg data.
.
Can Chinese companies replicate the Indian model? They are doing just that.
Take Bamboo Networks, a Hong Kong-based, closely held company.
.
Bamboo is a five-year-old software developer, one of the 50 companies in the
"Dragon's Head." It has 175 employees and does programming work in the
southeastern Chinese city of Guangzhou. By comparison, Infosys had more than
15,000 employees a year ago, and is adding between 1,500 and 2,000 code
writers and project managers in the current quarter.
.
Scale isn't such a big deal. Chinese software companies can grow just as
fast as their Indian competitors did in the 1990s, as long as they can tap
opportunities worldwide, while keeping a majority of their people in China,
another low-wage country.
.
"While we're not an exact parallel, we're in very many ways similar to
Indian software companies," says Gene Kim, 34, Bamboo's founder and chief
executive. Kim says his priority is to increase the services his company
offers to global clients, such as the investment bank Lehman Brothers
Holdings, the consumer goods maker Procter Gamble, the computer maker
Hewlett-Packard and the Japanese cellphone maker NEC.
.
Bamboo's Guangzhou unit received the highest quality certification given by
the Software Engineering Institute of Carnegie Mellon University in
December, two months after Newsky Technology Group became the first company
in mainland China to win the Capability Maturity Model Integration Level 5
accreditation, the highest ranking.
.
Indian companies have routinely used certifications to make their mark.
Manoj Srivastava, managing director of New Delhi-based Espire Infolabs,
which won the CMMI quality recognition at the same time as Bamboo, said the
award was evidence that "Indian organizations are constantly raising the bar
in comparison to our biggest competitor, China."
.
Bamboo and Newsky show Chinese companies won't be pushovers.
.
They won't be held back by lack of manpower. India has a pool of more than 2
million engineers, 8.5 times the size of China's technical work force.
.
Still, college enrollment in China is rising rapidly, and more students are
learning English.
.
Kim of Bamboo doesn't rule out an expansion into India. At the same time,
Indian software companies such as Infosys, Tata Consultancy Services and
Satyam Computer Services have already set up operations in China.
.
Ultimately, India and China may complement each other's strengths. Indian
companies will use Chinese programmers for writing basic codes, wile Chinese
software developers will use the Indian talent pool to recruit systems
architects, project managers, and other top professionals, of whom there is
a shortage in China. To cite just one example, Rajesh Rao, Bamboo's chief
operating officer, is an Indian national who worked for five years at
Infosys in early 1990s.
.
"India has a much deeper talent pool, but China is going to catch up," says
Rao.
.
For the United States, it's time to get real about jobs outsourcing. India
and China will be formidable sources of wage-cost advantage. And don't
forget the Philippines, or countries in Eastern Europe. Protectionism will
only lead to trade spats, which don't help anyone.
.
"No one said globalization would be easy," says Morgan Stanley's chief
economist, Stephen Roach. "But in the end, it sure beats the alternatives."
.
Bloomberg New



***************************************************************************
Berdikusi dg Santun & Elegan, dg Semangat Persahabatan. Menuju Indonesia yg 
Lebih Baik, in Commonality & Shared Destiny. www.arsip.da.ru
***************************************************************************
__________________________________________________________________________
Mohon Perhatian:

1. Harap tdk. memposting/reply yg menyinggung SARA (kecuali sbg otokritik)
2. Pesan yg akan direply harap dihapus, kecuali yg akan dikomentari.
3. Lihat arsip sebelumnya, www.ppi-india.da.ru; 
4. Posting: ppiindia@xxxxxxxxxxxxxxx
5. Satu email perhari: ppiindia-digest@xxxxxxxxxxxxxxx
6. No-email/web only: ppiindia-nomail@xxxxxxxxxxxxxxx
7. kembali menerima email: ppiindia-normal@xxxxxxxxxxxxxxx
 
Yahoo! Groups Links

<*> To visit your group on the web, go to:
     http://groups.yahoo.com/group/ppiindia/

<*> To unsubscribe from this group, send an email to:
     ppiindia-unsubscribe@xxxxxxxxxxxxxxx

<*> Your use of Yahoo! Groups is subject to:
     http://docs.yahoo.com/info/terms/

Other related posts: