Sunday, July 11, 2004

[news] Highlights from The McKinsey Global Survey of Business Executives, July 2004

Saturday, July 10, 2004
Dateline: China
The new McKinsey Global Survey of Business Executives was published late last week.  (See .)  Nothing earthshaking, but several items worth noting.
"India wins in talent and R&D."  What this means, I think (it really isn't very clear), is that to know India is to love India (I'm paraphrasing, of course) -- and India beats China as a better source for knowledge workers.  Within the exception of APAC execs, "more executives of large companies say that they plan to invest in R&D facilities in India than in China."  Frankly, this doesn't have to be the case and it simply points to the fact that the "the powers that be" in China need to make a better case for R&D sourcing in China.  I can keep making this claim until I'm blue in the face, but I can't be the only talking head pushing for China.  However, there doesn't seem to be a lot of faith in India's new government by anyone (well, except for Indians).  Hmmm ...
"China has its admirers."  Are they referring to me?    Well, not everyone is an admirer according to the McKinsey survey.  One major divergence between execs in China and North American execs is that the Chinese nationals have a lot of faith in their government; conversely, North American execs have almost no faith in the Chinese government:  95% to 7% respectively.  North American execs are more upbeat about India.  Nevertheless, China still gets the lion's share of foreign direct investment, even compared to India.  What's interesting, though, is that North American execs are "the least confident -- and least interested (in China)."  Not the best news.
Tidbits on Outsourcing
According to a recent DiamondCluster survey, 26% of buyers of outsourcing services were dissatisfied with their outsourcing efforts and 21% said they had prematurely terminated an outsourcing arrangement in the past 12 months.
The same article (see ) also noted a rule of thumb for contract management staff sizing:  Five to six employees on the client side for every 100 people that are assigned to an engagement by the supplier.
In another article, Gartner claimed that 90% of offshoring revs go to India, with Ireland as its main competitor.  (However, this might be heavily biased toward BPO.)  "China and Russia currently lack the resources or infrastructure to really challenge India, according to the analyst house."  Funny, but Gartner has done work with the the software industry promotional agencies in Shanghai and Dalian.  Perhaps they wore blinders during their visit:  Clearly there are at least four "cities of excellence" in China, i.e., Shanghai, Dalian, Shenzhen and Beijing.  To brush aside the "cities of excellence" while branding China in a negative light is simply irresponsible.  Gartner should know better -- if this is what Gartner really said.  (See .)
David Scott Lewis
President & Principal Analyst
IT E-Strategies, Inc.
Menlo Park, CA & Qingdao, China