Wednesday, June 09, 2004

[news] Are YOU Getting Your Piece of the US$1 Billion Pie?

Tuesday, June 8, 2004
Dateline: China
An article published on the 4th in the St. Pete Times ( ) had a quote proclaiming that there is already US$1 billion in outsourcing from China to the States.  (The article implied ITO -- IT outsourcing, but BPO might be included in this figure.)  A little bit of basic math:  This means at least 40,000 person-years of software engineers and programmers are working on projects for the States!!  Okay, let me know when you're done laughing!!  (BTW, the same exec stated that India is pulling in 10x that amount: US$10 billion.  Oh, I forgot to mention that these are figures for last year, not merely projections for this year.)
Some of the other quoted figures seem a bit more credible.  First, China is 50% less expensive than India and "Indian wages are rising fast."  Second, "while the average coder in China does not speak English, the managers do."  (Well, I wish this were true.  Perhaps it's better to say that the managers can read and write English.)  Third, there is a five-to-one cost advantage for work outsourced in China; this compares to a three-to-one advantage in India.
Recommendations include starting with a simple, well speced project.  Also, agree upon communications modalities.
Bottom line:  Even if the figures are way off, I think it's reasonable to assume that there is a tremendous opportunity for China's systems integrators in targeting the U.S. market.  The cost advantages are significant, even when compared to India.  Keep in mind that all PMs (Project Managers) MUST speak English; reading and writing fluency is fine for other senior engineers.  (I realize that there are a lot of good, talented engineers in China who can read and write, but cannot speak English.)  Finally, start with a small, well speced project.  (Frankly, this is probably the only type of contract most SIs in China could initially close.) 
David Scott Lewis
President & Principal Analyst
IT E-Strategies, Inc.
Qingdao, China & Menlo Park, CA (access to blog content in China) (AvantGo channel)
In China, to automatically subscribe click on .