Here’s an email I received this week about outsourcing failure. He substantiates what we’ve been saying all along: most outsourcing vendors are the same. Finding good technical resources is easy, finding a team you can rely on isn’t… All outsourcing vendors are the same . I work in India, China, Malaysia and UK.
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The Sad Truth About Your (failed) Outsourced Software Development Project
A massive tax cuts in the US is included in the recovery plan by the new US President-elect Barack Obama as he will meet on Monday with leaders of both parties to discuss the possibility of the plan. The new administration will likewise tackle renewable energy and infra projects. Obama offered his most detailed sketch yet of his proposal, which he called the American Recovery and Reinvestment Plan, in his weekly radio and video address on Saturday. He said he would propose to: provide tax breaks to workers; double renewable energy production and make public buildings more energy efficient; rebuild crumbling roads, bridges and schools; computerize the health care system; and modernize classrooms, labs and libraries
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Obama readies push for recovery plan, includes massive tax cuts
The year 2008 had been a worst year for some investors as it witnessed a downfall on its stocks . However, some of these investors are still expecting positive gains as the year 2009 comes in. Amid the low expectations, Obama has said signing a major economic stimulus package will be his priority when he takes over the presidency on Jan. 20.
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Investors still hoping for positive stocks in 2009
The Bush administration, particularly the US Treasury is painstakingly working with the auto bailout plan to rescue the big 3 automakers in US. The administration appeared to want an agreement with the big 3 before Christmas day. In recent days, however, administration officials and company executives have sequestered themselves, offering only the slightest hints of what they are discussing, as market analysts speculate about how long G.M. and Chrysler can survive without a government lifeline. Ed Gillespie, a senior adviser to President Bush, told Fox News on Wednesday that an announcement on aid was not necessarily imminent.
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White House plans auto bailout by Christmas
China HangSeng(15460) Near Term Trend:Turning Negative! I said “Watch 14.7k, a break below (on close basis) will lead to shallow down move, may be towards 14.2k -13.5k in the next few trading sessions,On the upside 15.3k is a next hurdle”. Since then we had seen index moving in a choppy range of 14.7k to 15.7k; although it has surpassed the important hurdle of 15.3k, I am skeptical about
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Trading near sensitive area!
Innovations drive the software industry which has once again been proved by The Software 500 , a revenue-based ranking of the world’s largest software and services suppliers targeting medium to large enterprises, their IT professionals, software developers and business managers involved in software and services purchasing. This year The Software 500 saw more than 100 new companies on the list for the first time, and the public/private company breakdown is 58% public and 42% private. According to the results of the survey, the software industry continues to grow in total revenue, representing growth of 14.7% from the previous year ($451.8 billion in 2008 compared to $394 billion in 2007), while the total employee growth rate of 1.3% shows modest increase in comparison with 2007. EPAM is proud to be named on the list (having advanced to the 190th place) along with 29 of its ISV clients, ranging from promising start-ups to global software leaders including three of the Top 10 honorees
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Innovation and Growth: The Software 500
With the year ending, thoughts turn to next year and analysts weigh in with 2009 predictions. I was recently searching my electronic library for historical statistics on software services revenues for India and China and discovered a Gartner Symposium ITXPO report from 2002 entitled, “Going offshore to globally source IT services”. The report included predictions for China and India’s software services industry growth and expert analysis from six years ago. It was interesting reading because predictions around India were accurate while predictions regarding China fell short substantially. The discovery of this report changed the focus of this post from future predictions to a historical look at the offshore software services industry progress in the past decade. In 2002, Gartner predicted software services revenues for 2006 with 0.6 probability Indian software services revenues – $27.5 billion Chinese software services revenues – $27.1 billion Indian software services revenues delivered from China – $10.8 billion However, the actual 2006 software services revenues as reported by CIO.com were Indian IT services revenues – $30 billion Chinese IT services revenues – $12 billion Indian software services revenues delivered from China – NA (I suspect the revenues are significantly lower than $10.8 billion) It is widely known China’s software services industry has not lived up to expectations. However, another interesting section of the Gartner report contained a SWOT analysis of the Indian outsourcing industry, the industry weaknesses included Positioning and brand management Cultural differences Sales and marketing Leverage experience for higher-value addition Business process experience Legal system Globalization skills Most would agree Indian outsourcing companies have overcome these weaknesses in the past 6 years to become global players. In 2008, a SWOT analysis of the Indian software services industry would include the 2002 weakness as today’s strengths. In addition, today these seven attributes are often listed as China’s software services industry weaknesses. It is commonly reported the Chinese outsourcing industry is 10+ years behind India, however if India was able to overcome these weaknesses in 6 years, will China overcome the same challenges within the next 6 years? Overall, there has been significant improvements in each of the areas listed above over the past 2 years in China. However, a significant gap between Indian and Chinese software services companies still exists, particularly in maturity of business development. Chinese companies realize this difficulty and are allocating more revenue towards business development by developing sales and marketing teams internally or through acquisition of foreign companies. Cultural differences are also becoming less of an issue, as China’s “opening up” has increased exposure to international business standards but there is still substantial room for improvement. Expect to see noticeable improvement in these areas in the coming year as the Chinese software services industry continues to mature.
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Chinese software services revenue predictions fall short
All Ordinaries Index(3499) Near Term Trend: Sideways I said “The daily/monthly & quarterly charts indicating towards possible “shift” in the control, provided 3400 is defended by the bulls; & on the upside a close above 3740 will be the first sign of the strength”. Last week, the index failed to achieve anything, i.e. neither a close above 3740 nor a break below 3400.On the daily charts, I was
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3740 remain untouched…! Weakness persist!
Nikkei 225(8568) Near Term Trend: Sideways In the previous review I said “Last 4 weeks the index is moving in a tight range of 7.6k to 8.6k, keeping possibility of “double bottom” scenario, alive. It seems that the downside is now fairly protected at 7.6k, but what we need is a quick up move beyond this trading range and then the close above 9.6k for the confirmation of the reversal”. However,
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Failed to clear the hurdle(8700)!
It is widely known relationships are key to business success in China and most westerners doing business in China understand basic cultural nuances like how to present business cards, refrain from showing emotions, give face, etc. Although the process for building relationships with Chinese is no different from how relationships develop elsewhere, finding common interests, developing rapport, showing respect, etc., in practice it is difficult due to cultural differences. Unfortunately, many foreigners doing business in China develop negative attitudes of Chinese companies and culture causing unintentionally disrespectful attitudes towards Chinese business associates. These attitudes damage relationships and jeopardize business results.
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How to build business relationships in China
Most of the Asian Markets , including the Pacific Markets have seen and experienced a slight upswing on its market tradings on Wednesday, but the Hong Kong Hang Seng index dropped 2 percent on its opening. Market breadth was positive. On the New York Stock Exchange, winners beat losers by four to one on volume of 1.13 billion shares. On the Nasdaq, advancers topped decliners by over five to two on volume of 1.74 billion shares. Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.71 percent from 2.70 percent late Friday.
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Most asian markets experience moderate gains
Strait Times(1754) Near Term Trend:Turning Positive In the previous review I said “weakness is persistent on the STI, unless and until seen a move above 1780-1785; the best case scenario is range trading between 1470-1785″. Since then we had seen a down move towards 1638 and then a strong rebound almost there near to the upper end of the range. Now what we required (for trend reversal) is a
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STI showing arresting tendency!
All Ordinaries Index(3533) Near Term Trend: Turning Positive I said “the activity now shifted to new falling parallel channel (blue), unless seen the close above this channel (last weeks value 3740) the downtrend will remain intact; on the quarterly charts 3400 is crucial, holding close above this in the current quarter (Dec 08) will be a positive development”. Last week the index failed to
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Final combat…(3400-3740)..?
Nikkei 225 (8395) Near term trend: Positive I said “the index is making confused moves, I will turn bullish only if closed > 9k; on the downside if broken 7960, it may retest October low”. As anticipated the Nikkei slipped below 7960, but restricted the fall to 7406, rather than retesting Oct low of 6994. For the last 4 weeks the index is moving in a tight range of 7.6k to 8.6k, keeping
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Holding double bottom, good times ahead…?
World Index(311) (In house-based on 44 active indices of the world) Near Term Trend: Positive In the last review (293) I said “a move beyond upper end of the channel (daily) will confirm end of wave ‘c’, thereby opening wave ‘d’ on the upside;on the weekly charts a move beyond 329 is required for confirmation of reversal of the trend; on the monthly charts there is a ‘possibility’ of double
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Bulls are ready for the counter attack..?
China daily recently reported Indian outsourcing giants are aggressively acquiring smaller Chinese outsourcing companies, including more than 40 local outsourcing companies in Shanghai. Indian tier 1 outsourcing companies have been operating in China for years, but traditionally have built development centers rather than growing through acquisition. There are several reasons for this significant shift in Indian outsourcing companies China market entry strategies. Economic crisis – As sales slow or decrease in America and Europe, Indian companies need emerging markets to increase revenue. Opportunistic acquisitions – A previous post on how the global economic downturn has affected Chinese outsourcing companies , mentioned that many smaller Chinese outsourcing companies are experiencing cash flow problems making them prime targets for acquisition. Local business development – In China, relationships (or guangxi) are essential in winning local contracts. Many small outsourcing companies in China were setup because of relationships with buyers and have significant guangxi helping win local business. China’s services growth – Analysts are predicting signification growth in the local Chinese outsourcing industry over the next 10 years
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Indian outsourcing companies change China market entry strategy
Richard Brubaker ’s article 20 Million Chinese Migrants Out Of Work discusses how the economic crisis has begun to affect the Chinese employment market. Many companies in China are scaling back, increasing China’s unemployed. A decreased demand for Chinese software developers would benefit Chinese software outsourcing companies battling a skilled labor shortage causing wage inflation and increased turnover. However, a further look into Chinese outsourcing companies recruitment efforts shows that the economic down turn has not significantly affected the demand for skilled resources. In China, online recruitment websites account for the majority of software outsourcing companies job applicants and recruiting budgets. Zhaopin.com is the Chinese equivalent of monster.com and is used by most outsourcing companies in China for recruitment. A search of the number of jobs posted on zhaopin.com is a indication of open positions at outsourcing companies and recruiting budgets
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Has the economic crisis helped outsourcing companies in China?
China SSE Composite(2001) Near Term Trend: Positive In the last review I said “Near term trend is positive;expect a swift up move towards next crucial level of 2.2k; stop is placed at 1740-1780″. Since then the index consolidated within the range of 1850-2000, without disturbing the bullish setup. See the inlaid daily chart, the index has retraced the previous down move (from 2050 to 1838) of 9
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Bulls gathered (much) required strength…
Dean Stevens recent blog post Uncertain Global Economy Hits Providers highlights specific examples of changes occurring within Chinese software outsourcing companies. Industry wide, smaller Chinese suppliers are running into cash flow problems, while larger Chinese software outsourcing companies are changing strategic plans and generally shifting focus away from servicing Western companies towards the local market. However, China Daily and China Tech News both report continued growth in the industry and increased demand both at home and abroad. Also, the majority of demand for services outsourcing from China does come from America or Europe, the areas impacted most by the economic down turn. So, why are these Chinese outsourcing companies in trouble? The Chinese outsourcing industry has grown substantially over the past ten years. Active support from central and municipal governments with capital from local and foreign investors speculating on industries growth has created a “China software outsourcing bubble”. As happens with tech bubbles, many small Chinese software outsourcing companies have emerged that have not been able to reach the economies of scale required to compete with Indian and local rivals. Although, demand for outsourcing services has grown this year, the rate of growth has decreased.
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Is the global economic downturn affecting Chinese outsourcing companies?
All Ordinaries Index(3484) Near Term Trend: Negative In the last review(3483) I had stated “the trend is down; expect short term respite if able to hold 3400(then value of the lower end of the parallel channel); on the monthly charts, again, 3400 is a critical long term support; however if failed to hold & recover we may test 3000″. Since then it broke the lower end of the channel (dotted) & went
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Required close above 3740; else…
Last night I was introduced to a potential software developer in the Chinese software outsourcing industry. His English name was Dragon (a very popular name among Chinese men, I have met several Dragon’s over the past couple of years), and he is a 30 year old medical doctor. Dragon recently decided to change careers and has left the medical profession and returned to University to study IT. My perception of Dragon was very positive and he came across as professional and well educated, as one would expect from a doctor. It seemed he spoke decent English but it was still more convenient for us to communicate in Chinese. In the west, a physician is considered a prestigious career, so I was interested in his reasons for making the switch. Dragon had a very different perception of his chosen profession as he explained his frustrations with the bureaucracy and inefficiencies of the Chinese medical system and desire for a faster paced career with more opportunities for advancement. Dragon is a good example of the new generation of Chinese professionals. Unsatisfied with a stable career (the old iron rice bowl), they seek a challenging career with quick advancement opportunities. My first thought was he had an inflated perception of an IT career in China. With hundreds of thousands of newly graduated software developers competing for entry level jobs it is not an easy industry to get into. But on second thought, many of the 30 year old project managers I had met at software outsourcing companies were managing 30+ man offshore development centers. When considering the conditions in Chinese public hospitals, I would assume a 30 year old software development project managers salary would double a 30 year old doctor in China. Ambitious young Chinese professionals like Dragon have noticed the IT salary inflation in China over the past couple of years and want a piece of the action. The current demand for English speaking software developers in Shanghai and Beijing is higher than supply resulting in increased turnover and higher salaries, but this will balance out in due time as there is no shortage of Chinese entering the software industry. Although Dragon has a long way to go before he will be working in an offshore development center for an overseas company, he is intelligent and driven and I am confident he will be successful in his newly chosen career. Visit The Dao of outsourcing to comment on this article. CSO Group