Destination Mainland

India is acknowledged as the premier destination for software development. A

large number of Fortune 500 companies turn to Indian companies for their

software needs. Today, India and offshore software development are fairly

synonymous. There are several factors that have contributed to the Indian

success story: a large population of English speaking engineers with a very

strong capacity for arithmetic reasoning and analytical thinking, government

support and IT infrastructure among others.

Other countries have taken note of this success and would like to emulate

India. China is one such country. There have been quite a few Chinese

delegations visiting India for a first hand experience of the factors that

contribute to India’s success. The delegations have included government

officials, people from the industry and educational institutions. The

seriousness with which the Chinese view the industry is evident when you

consider the recent visit by the Chinese Premier Zhu Rongji and the fact that he

chose to visit Bangalore, India’s Silicon Valley.

Against this backdrop, everyone is now thinking about potential competition

from China. Depending on whom you talk to, you could get differing points of

view. One school of thought believes that China will take a long time to catch

up with India. The argument is that Indian engineers have skill sets that are

difficult to come by and China will not be able to compete with.

Another point of view is that software skills can be taught and the Chinese

will acquire these in a few years. China’s success in manufacturing is cited

as an example to prove this point.

The country started late in manufacturing but has now become the choice

destination for most types of manufacturing. The counter argument here is that

there is a lot more tacit knowledge that goes into the software development

process and hence the manufacturing model cannot be duplicated.

Well, while, China is obviously keen to enter the software sector, it also

represents a huge opportunity. China’s GDP in 2000 was an estimated $1.1

trillion and it has been growing at approximately 8% annually. The opening up of

such a large economy offers a potentially huge market for software services. At

present, the potential lies in the telecom, financial services and manufacturing

sectors. Indian IT companies seeking to globalize their operations should

evaluate China as a potential market.

In addition to its potential as a market for Indian IT, China could also

serve as a base for software development for Indian companies. China offers very

high quality infrastructure for e.g., it produces an estimated 1.173 trillion

kWh (1999 data) of electricity, has about 135 million telephone lines (2000

data), 65 million mobile phones (2001 data) and about 22 million internet users

(2001 data)**.

China also offers a potentially large pool of human resources. However, there

are limitations. While the talent pool is unquestionably large, trained

programming resources are relatively scarce. Also, the appreciation and

implementation of project management processes is still evolving. Companies are

now gearing up for CMM assessment. Knowledge of English is also a barrier at the

moment and adoption of English by Chinese nationals will have to be assessed on

an ongoing basis.

There are many countries wanting to achieve the status of the preferred

destination for software development and China could steal the show in the

future. Customers will evaluate the value proposition that different economies

and companies offer. Indian companies have demonstrated that speed, imagination

and hard work have got us to where we are today. We will have to demonstrate

more of the same to thrive in this constantly changing and competitive

landscape.

As economies globalize, there is competition not just between companies, but

countries as well. India should be aware of the competition it faces and create

a value proposition to help it compete. To accomplish this, we need an

environment that nurtures not only established companies but also start-ups and

small innovative companies. Some of the areas of where we could accelerate

improvement could be infrastructure creation, education and labor laws.

The author is senior V-P at Infosys Technologies