Friday, June 18, 2004

[news] How to Make an Annual Profit of Over RMB1,000,000 Per Employee!!

Thursday, June 17, 2004
Dateline: China
Catchy title, eh?    An article published in yesterday's edition of The New York Times ( ) describes how Infosys and Satyam, two of the largest IT outsourcing firms in India, did just this.
Contrary to popular opinion, it is not just low(er)-level programming which is being outsourced.  In the cases noted above, it was "the work of software architects, senior software developers and software developers" that was being outsourced.  And the client?  Microsoft!!
Microsoft was billed at $90 per hour for software architects.  This is less than $150-200 per hour that the best independents may charge, and less than the fully-burdened labor rate for full-time employees, but it's still an annualized take of $180,000.  However, "(t)he top annual salaries paid by Indian outsourcing companies to Indian software experts working in the United States are $40,000 or so."  This is a profit north of RMB1,000,000.
Bottom line:  Don't expect to see this kind of profit on your average contract.  However, this example points to the fact that billables for work done in the States are astronomical compared to billables for work done for domestic firms in China, Korean firms or Japanese firmsThis begs a strategy of a SWAT team in the States combined with a bunch of code warriors back home in China.
David Scott Lewis
President & Principal Analyst
IT E-Strategies, Inc.
Menlo Park, CA & Qingdao, China
WARNING:  Articles published in The New York Times go to a paid access archive in relatively short order.  If you want to read the article, read it NOW.
P.S.--Off to south China for a week ... and meeting all the usual suspects (about 25 companies in GZ, SZ, ZH and HK).  Please note that there will not be any postings during the week of 21 June.