US software outsourcing-Can China "complement" India?

Source: Internet
Author: User

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Author: Yang Xin/zdnet China AM

Editor's note: Not long ago, AOL cut off 450 employees in California in a tone of thumb and switched to recruiting software programmers in Bangalore, India. Big companies such as IBM, HP, Oracle, Google, and Yahoo have plans to recruit people in India or outsource their businesses to India. These actions have aroused a lot of dissatisfaction in the United States. Recently, some U. S. Members of Parliament accused India and other countries of stealing the rice bowl of U. S. Tech personnel and demanded that Indian companies hire more U. S. Employees. In view of this, China's software outsourcing market was mainly in Japan. These Denial-of-India actions mean a development opportunity for Chinese software companies? Can we "complement" India in the U.S. software outsourcing market? The author of this article has worked in a software company in the United States to address this issue.

Opportunities in China

When outsourcing does not find a specific Chinese word to match with it, developed countries (G-7 countries, including Canada, France, Germany, Britain, Italy, Japan, etc, but more than 70% of software companies from the United States have begun to look for cooperation partners in China, preparing to transplant the development, testing, and maintenance tasks of software products to China. For Americans, this is one of the simplest ways to reduce labor costs.

For China, this is a significant improvement in China's resource supply and global market demand. China is no longer a processing factory that provides cheap blue-collar labor. She is gradually becoming an intellectual resource provider. While providing white-collar resources, China has gained first-hand knowledge and experience in information industry management, marketing, and operation. It is self-evident that such a change in China's information industry is positive.

But when it comes to software outsourcing providers, Americans are still the first to consider India. 20 years ago, India's Infosys Technologies took over the first business when China was still in the wave of reform and opening up. Now, the company's annual sales have reached 0.7 billion million USD. In addition, other Indian companies, such as Tata Consultancy and Wipro, are large-scale gold miners. When talking about native Chinese companies (excluding PwC, a subsidiary of IBM in China), if we have accurate statistics, we believe that their outsourcing business is also far from Indian companies.

However, a recent growth seems to give Chinese enterprises a chance. According to US News reports since the end of last year. As white-collar Unemployment Rates Soar, local American staff have protested, claiming that Asian outsourcing companies, especially Indian companies, have snatched their job opportunities. The response was so intense that some American politicians began to put pressure on companies in the United States and India in the United States, asking us to prioritize the interests of American employees for more votes.

Can we take this opportunity to "complement" India in the U.S. software outsourcing, or even catch up with us?

Outsourcing market status analysis

This article discusses that outsourcing projects in China are mainly concentrated in the software industry because it does not need to transfer a large amount of real estate and physical resources. Common projects include software development, quality testing, maintenance, and after-sales service. These projects can be fully packaged for or separated by a company. For example, Company A undertakes the development task and the after-sales service center of Company B provides the customer's telephone information.

Outsourcing development and the development of various consulting companies are inseparable. When the economy is good, the Technical Consulting Company has obtained a large number of outsourcing projects from customers of all sizes. For some time, the revenue of a Technical Consulting Company was comparable to that of a management consulting company. But when the economy deteriorated, American outsourcing customers thought of Asian companies. Low-cost labor and relatively mature product quality have led many American companies to port their businesses overseas.

In terms of time, India has already taken the lead in brand and market share because of its first step. From the perspective of human resources, their language advantages ensure the convenience of business communication. Even Indian engineers in American companies have more freedom to develop than Chinese engineers. From the perspective of material resources, India's Bangalore is already known as the New Silicon Valley. It has gathered numerous information industry companies and a large amount of foreign investment.

Software Outsourcing in China

The gap between China and India is self-evident. McKinsey consulting listed some amazing data during a visit to the president of Infosys, India. In addition to the astronomical business scale and mature management system, Infosys has a wide range of business directions, including software product production, system integration, and Internet-based platform services, information industry technical consultation and so on. So far, no company can look at its neck and back.

Language barriers are just one of the notable challenges facing Chinese people in the international market. Another imperceptible obstacle lies in the logic of thinking. During frequent exchanges with American customers, Chinese outsourcers may find that the "shopping and selling" philosophy of the East may focus on the current results with Westerners, the logic is less compatible with the unstable factors in the future. At the same time, Westerners emphasize the supremacy of facts, and the report style is straightforward. Therefore, they may be confused by the "although, but" and other turning words that the Chinese are used. All these differences need to be gradually integrated in the cooperation process.

My American company has recently made transactions with several outsourcing companies. Outsourcing business providers are from Bulgaria, Beijing, and Japan. Although the U.S. company has been involved in several outsourcing projects, and the outsourcing provider has five years of experience, the cooperation process can be said to be difficult and difficult. Conclusion: If the outsourcing business process is clear and smooth, Chinese outsourcing companies need to study several aspects.

Outsourced customers with insufficient experience generally spend more on projects than expected. After the project starts to run, outsourcing customers will spend a lot of manpower and material resources on project management, quality management, contracts and international exchanges. For small and medium-sized project customers, these hidden costs are difficult to be included in the plan at the initial stage of the project. One of the tasks of Chinese outsourcing providers is to clarify these hidden costs to customers at the beginning of the project to avoid future disputes and conflicts.

Intellectual property protection is an essential part of outsourcing projects. Especially when the outsourced project products are modular software, the source code, internal technical materials and trade secrets will inevitably flow between the partners. If a company's ERP module or some of its code logic is "misappropriated" to another company's products, once the sensitive client files a lawsuit, the consequences are unimaginable.

The Quality Assurance System of China's software industry is also not perfect. The testing work of American software companies has gradually evolved into an independent science, covering the configuration scheme, testing mechanism, cross-platform strategy and product performance, stability, and other knowledge modules in independent regions. In a testing project that I worked with an outsourcing company in Beijing, I found that the quality assurance system of the company was still at the stage of repeated and redundant Manual Tests and paper reports. How can outsourcing customers have confidence in product quality with such professional standards? As a result, outsourcing customers had to, in turn, "Train" outsourcing providers, so they did not get tired of the complicated requirements for a large number of test results reports. It also wastes a lot of time and effort on both sides while limiting the free space for external users.

Chinese companies already have a lot of capital and experience in pure software development projects. However, after the release of the software, subsequent maintenance, after-sales service, training and other tasks also accounted for a large proportion in the software engineering cycle. The development was completed before the delivery date, and then the work attitude and method of walking away not only damaged the cooperation relationship with old customers, in addition, it leaves New customers with a first-in-first view of inadequate services.

Diversification of outsourcing projects is imperative. Apart from software development, China can also learn from India. As it grows in the information industry, it expands outsourcing projects to system integration, technical consulting, and project management consulting. In fact, the mature performance of Indian companies in terms of system, project, and operation management is also one of the important reasons why Americans are confident in choosing them as outsourcing providers.

Competition of human resources. Because "cheap labor" has discovered its value in the international market, India's outsourcing market prices have gradually increased. As mentioned above, India has started to create outsourcing companies in China as the second-level intermediary. In order to reduce the increasing cost, American companies gradually set up subsidiaries in India or China to hire local employees to complete outsourcing tasks. The question of human resource competition lies in the face of: how to prevent Chinese engineers from flowing to outsourcing companies in the United States or India? I believe that Chinese enterprises have gained a wealth of experience and experience in fighting for human resources with foreign companies in 1990s.


In short, the first challenge we face is to increase the awareness of Chinese people in the outsourcing business market by ensuring the quality of outsourcing products and services, so as to gain more international business opportunities. It should be noted that China also steals American job opportunities, but the domestic criticism in the United States is mainly aimed at India for the time being, leaving us with limited time.

In addition, Indians are also conscious of reducing the negative impact of outsourcing on the U.S. economy. India claims that its business development has led the company to create business in the United States, thus creating jobs in the United States. Just as India has become a labor base in the United States, India has also become the second largest overseas market for U. S. High-tech products. This argument is similar to the argument that the Japanese explained their car industry had created a job market for Americans.

In the long run, Indians have planned to develop the "passive" Accept outsourcing business model to "active" discover customer needs and provide a full set of solutions. They also plan to include human resources from more countries into the company's assets.

This is obviously an ambitious plan. Of course, in China's information industry, we will not stay at the stage of low-cost white-collar labor. Infosys is already the top candidate for Indian graduates. When our company was able to take this step, our national software industry was truly revitalized.

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