Thursday, March 18, 2004

Welcome to Global Sourcing/Offshore Outsourcing Alert. This blog covers all aspects of offshoring and global sourcing, with a focus on IT offshoring in China. To subscribe, simply enter your e-mail address in the form provided at the bottom of this posting.

Specifically, this blog will feature original article summaries and site reviews, along with "Bottom line" commentaries on noteworthy articles and sites. So let's start our engines ...

As many of you know, there is a barrage of anti-offshoring stories appearing in the American press. To be fair, many of the "anti" stories have their "pro" counterparts. Also, most of the "attacks" are focused on India and rarely on China.

Fortunately, an excellent news story appeared on the CBS Evening News tonight (Wednesday, 17 March). For those who do not know (and some accessing this site may not), CBS is one of the three major news broadcasters in the United States.


Click on the story, "China Boom Helps U.S."

Here's something that's a bit ironic: I noticed that the CBS site was often blocked when I tried to access it in China!! Alas, the irony of it all.

"Gartner sees India as leader in IT outsourcing" (18 March 2004 ) in India Infoline News.

I guess so ... if I'm forced to chose. However, China is mentioned (as is Russia) as an emerging strong contender. Something that is discussed in the article is the affinity between Western Europe and many of the ten new countries entering the EU on 1 May. Bottom line: Europeans will focus on working with other Europeans. There will always be exceptions, but this is the general rule. For SIs in China, take this to heart.

One emerging market is the SMB market based in the States. BusinessWeek noted that there is a growing market targeting U.S. SMBs and that contracts are often farmed out to offshore smaller IT consultancies. And here's a quote to take to the bank: "Back in Silicon Valley, some venture capitalists acknowledge that they're encouraging startups to send as much work offshore as possible to minimize start-up losses -- with some making it a condition of an investment." (Gee, I wonder who has a lot of contacts in the venture community? Better make sure my Churchill Club, IBD Network, and SDForum memberships are kept up-to-date, even after I move to China!!)

Okay, so not all is lost. At least the Indians may be spending some of their hard-earned Rupees on U.S. brands. Bottom line: Doesn't do much for U.S. software engineers, and according to a recent piece in The San Jose Mercury News, the situation doesn't look so great (and The Mercury News story was one of the more optimistic stories I've read in recent months).

Are you an offshore (offshore to the States, that is) systems integrator looking for some talking points? John Hagel -- yes, THE John Hagel -- published a feature which appeared today on It's a lengthy piece and I'll probably tackle it in a future posting. I think it's time for another FTF with John. Back in my Oracle days, I tried to bring in John's group at McKinsey, but he was quoting north of US$350,000 per month. This is steep even by Oracle standards!! (We engaged Patty Seybold instead.) As usual, John makes a lot of good points. I hope to get his personal take on a lot of issues, e.g., India vs. China, the migration of Indian SIs up the integration food chain, et al.


David Scott Lewis
President & Principal Analyst
IT E-Strategies, Inc.

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