Wednesday, June 22, 2005

Fiction Alert: Why more US companies are choosing China instead of India for Offshore SW & IT Sites

jun 22nd

this is hilarious. this guy is taking 'marketing rhetoric' to extremes. the commies haven't quite figured that lying through their teeth isn't quite the same as marketing.

yes, turnover is low in china while it is 'shooting up' in india. that's because we in china shoot those who want to change jobs :-)

and costs in china remain low, because we don't have to repay the loans we get from the state-owned banks :-)

From: Frank H
Sent: Monday, June 20, 2005 7:34 PM
Subject: Take a virtual tour & find out why more US companies are choosing China instead of India for Offshore SW & IT Sites.

Dear Sir.,
Nowadays, more and more US companies are setting up Offshore Development Centers (ODC) in China instead of India. Some even start to move their existing India sites to China. Among many of the compelling reasons, the followings are the most cited ones:
  • Significant cost savings over India sites: While the India sites cost shoot up 20% a year over the past 5 years, cost of running similar China sites remain flat during the same period;
  • Very low turnover rate: While turnover rate at many India sites shoot up to over 60% a year, those in China remain well below 10%;
  • Much easier to recruit & maintain quality teams for extended period: While it is becoming an impossible task to maintain a stable team in India for more than 6 months, most SW professionals at China sites stay with the team for many years;
  • Much better infrastructure than average India sites: while things become intolerable outside the boarders of a few SW parks in India (bad road, dirty water, bad phone connection, frequent power outage, etc.), everything look nicer every where you go in China. Even Indian staffs prefer to work at the China sites;
  • 8 hours less flight time than going to India: To get the job done, face time counts. So getting there 8 hours sooner makes a huge difference to the US staffs who manage the Offshore sites;
  • Much easier time-zone management than India sites: In the afternoon hours of US time, while staffs at India sites are still sound asleep, the staffs at China sites are already in the middle of routine conference calls with their US counterparts; 
  • Follow the customers: While it might be years before our clients' customers would set up any type of operations in India, many find their customers demand immediate local support in China today.
To take a vitual tour of selected SW ODC sites, please click on the following links:

You are also invited you to visit our China sites in person anytime at your convenience. Please feel free to contact us for additional information.

    VP Business Development


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san said...

But let us note --

Who Respects and Likes America Most? Indians do.

Anonymous said...

Here is John Dvorak pointing to what US companies are actually choosing:

From MarketWatch, online at:'s+Second+Opinion&siteid=google


6/23/2005 12:01:00 AM

By John C. Dvorak

12:01 AM ET Jun 23, 2005

BERKELEY, Calif. (MarketWatch) -- As the venture capital community begins to loosen its purse strings, the average investor can get some inkling of what might be hot in both the new issues market and the market in general by following the money.

EETimes likes to report on whatever new deal it can find out about in general high-tech. It says in a recent article that it has managed to track over $1 billion
of deals as of June 22. There are enough publicly announced deals on that list to
give us some inkling as to what's hot and what's not. Here's the link.

Three things seemed to jump out at me when I went over the funding:
optical,wireless broadband and India.

Out of 86 deals that I counted, at least 20 had something to do with
wireless technology in some way or other. This means radio circuitry, LAN's, and
mobile/cellular start-ups are all trying to find ways to do things cheaper, generally
to sell a lot of chips. This is nothing new.

But why did India crop up eight times? While a couple of the listings
were indeed pure technology investments, most were infrastructure investments to
get better high-speed access into India.

I have never seen VC's invest in the service sector like this before. The Indian deals seemed to be more about rigging India for high-speed access to the rest of the world than anything else so that the movement of American jobs offshore can continue at a rapid pace

If you've been reading the overseas journals, specifically from India you'll discover that the large offshoring companies think that the real growth market for them is the back office.

The contractors are intent on getting large corporations to outsource their back
offices to India. This means a push to move all kinds of clerical tasks to Bangalore
by somehow deconstructing the functionality within the corporate business process by
segmenting tasks. Thus, Sally over there rubber stamping invoices for $8/hour can
become Dharani in Mumbai doing the same thing for $1/hour.

It's the emerging new science of business process analysis that will eventually move
as much of the general office work to India as possible. The idea is that you can
break down a business into highly defined components and those components, where
efficient, can be sent offshore to be done cheaper.

The U.S. Patent Office has actually encouraged this development by allowing companies to patent a business process. It did this by highlighting not only the possibility that you can do this, but by emphasizing its importance.

In effect this is taking the "it's not my job" union-syndrome and rethinking it as a
strategy to pigeonhole job functionality so much that everyone becomes a true cog in
the wheel. This used to be a criticism of business. Now it's a benefit.

The key to making all this work is cheap efficient international telecommunications.
They're needed so that the corporate network runs as efficiently in Bangalore as it
does in Chicago and so you can't even tell that most of the network nodes are
actually in India while headquarters is in Chicago.

And on top of that it costs no more to make a call from Mumbai to New York than it
costs making a call from New York to New York. In fact it could be cheaper thanks to
voice over Internet calls!

Ironically, the American press, which is hardly reporting on this -- except to boost
the idea by parroting pro-offshoring rhetoric, is also at risk. Most reporting today
is done over the phone and could be done from Mumbai as easily as San Francisco.
C-Net, a major technology news source has already experimented with this process.

Whatever the case, the implications of offshoring the back office are far-reaching
and understudied. At first there seemed to be sound economic reasons for unabated
offshoring, until the icon of modern economics Paul Samuelson spoke up and rebuked
the logic. See information here.

Then everyone shut up about the economics and just continued anyway.

While I'm not personally a fan of any of this, somehow I expect we'll muddle through
it with minor damage. I'm an optimist. But if I were a real estate investor, I'd be
rethinking my position in those large office complexes.


san said...

Protectionist forces in the developed countries are of course peddling their own fiction to fight the tide of outsourcing. False allegations that any confidential customer information outsourced to India will fall into the hands of criminals for misuse.

NASSCOM and Indians in general need to fight for the image of India's outsourcing industry. Recently, I saw the New York Times obsequiously standing up for China's attempt to purchase Unocal, yet never do I see NYT positively reporting on India. If Indians had tried to purchase Unocal, you know NYT would piling on the venom.

I agree with the comments on Business Process Analysis, though. I liked the recent comments by one Indian corporate VP who said,
"You go from solving my problem, to serving my business, to managing my business, to being my business."