David on IT Outsourcing in China: [news] neoIT Slams China: A Critique of their Hot-Off-The-Press White Paper

Tuesday, July 20, 2004

Dateline: China

I'm convinced that the folks who call themselves "analysts" at neoIT are just plain ignorant and stupid. The so-called "update" to their Mapping Offshore Markets report was released earlier today (California time; it's Tuesday morning in China). What a farce!! Absolute garbage and their info on China looks exactly like the same info they published last year, with plenty of omissions and misinformation (whether intentional or not).

However, this year they gave a blow to China and "demoted" China as a preferred destination for ITO (IT outsourcing). Matter of fact, in their "Key Findings" section they list India and Canada as the two top choices, with a favorable mention given to the Philippines, Russia, the Czech Republic, Poland, Hungary and Mexico -- NO mention of China!!

The good news, I guess, is that their report gives me plenty of cannon fodder for a counter-attack against their buffoonery.

It is absolutely amazing that China comes up as the number two spot after India in just about EVERY survey. It seems that just about everyone is scrambling to develop a "China strategy." But according to neoIT, you'd better have a Philippines, Hungary and Mexico strategy first, even though their own stats show that the level of ITO activity in China is almost equal to the COMBINED IT services exports of the Philippines, Russia, the Czech Republic, Mexico, Hungary and Poland (to repeat, China = Russia + the Philippines + the Czech Republic + Hungary + Poland + Mexico; not quite, but almost). Yes, most of the ITO in China is for Japanese clients, but who are the major clients for ITO services performed in Eastern European countries? And since their "facts" about China are wrong, I'm suspicious of their data regarding Mexico, too. BTW, even if China's ITO is mostly for Japanese clients, this does NOT mean that there are not significant resources in China perfectly capable of servicing American clients. I'll go so far as to say that in at least two of China's "cities of excellence" (my phrase), the systems integrators are focused on the States (NOT Japan) -- and in working with U.S. systems integrators, software vendors and corporate IT shops.

Also, I'll give a little bit of a pre-release announcement. A major global (but U.S.-based) management consulting firm (one we all know and love) will be validating their earlier research that China is indeed the number two spot after India.

I'm keeping to my mantra: It's all about the Golden Triangle: The U.S., India and China.

To review a copy of the neoIT press release click on http://tinyurl.com/5t5eb .

To retrieve a copy of their White Paper click on http://tinyurl.com/4hzru .

Bottom line: IMHO, neoIT has lost it. "Dumb and dumber" isn't just the title of a movie, it's the best way to describe neoIT. I used to think pretty highly of their analysts; at this point, I've lost all respect.

(BTW, a report released over the past week by eMarketer notes that one of the things blog readers cherish most is honesty by bloggers. Well, I'm being honest.)

Cheers,

David Scott Lewis

President & Principal Analyst

IT E-Strategies, Inc.

Menlo Park, CA & Qingdao, China

e-mail: click on http://tinyurl.com/6xeue

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