China benefits nowadays from an incredible momentum in many areas, including IT outsourcing. It is funny to notice that most articles published in the Western world about virtually anything include a stance on China; it might be to praise what China is doing in the area covered by the article, to criticize the country or to mention that China’s potential role in the area is a big question mark.

And it is now reaching our inboxes. One of my clients recently forwarded the following email to me, which he received it from “a friend of a friend”. Here is the full email:

“A colleague of mine is just back from a 3-week family trip to China. He visited a friend, from France, who is working on a nuclear plant, there. The first 4 reactors have been built by French personnel. The next 4 are being built by the Chinese, with some light supervision from the French team, per mutual agreement. But the French got scared at what they see being built (low quality), so they are almost gone by now, and will all be before these new reactors are turned on. Same kind of knowledge transfer from Airbus to the Chinese aircraft manufacturers. Isn’t it scary…?”

Although I am almost sure the email is a hoax, I would like to reflect on the people who took the time to write this message, with the obvious objective of discrediting China.

We are talking about nuclear reactors here right, not cheese or perfume. A failure could potentially kill millions of people. If I have to name a responsible here, it would definitely be the French company, which engaged into a business under such hazardous conditions. If Chinese potential buyers are not smart enough for your great technologies, by all means keep them for you.

And the same thing goes with the many other industries where China is getting serious momentum. How many times have we heard people in the Western world complaining about the fact that China might soon become a major supplier in the auto and plane industries for instance? So, on the one hand we are manufacturing virtually everything in China (save defense stuff) but on the other hand we do NOT want Chinese engineers to understand what they are doing, and eventually to create their own brand? Hello??

All of the above applies to software too. I have heard a million times that Chinese developers were good only at performing basic programming tasks, but way behind India when it came to advanced programming techniques.

If it is true, please somebody tells Microsoft, Google and the likes to stop redirecting massively some of their most strategic developments to China.

And since I am taking on the French today (did I ever say on this Blog that I was originally from France?), let me share with you this interesting experience. I was listening recently to France Culture, a state-owned French radio station. Two French experts were debating the pros and cons of globalization. The name of the podcast itself was quite interesting: “should we fear globalization?” A word such as “fear” in the title says a lot about the message the producers want to carry. During the debate, Jean-Claude Barreau, presented as an expert had the nerve to declare, “we all know that the Chinese never pay!”

Lou Dobbs would have been delighted, but what a pitiful comment! Thanks God, the other debater was a real expert.

“Lies have short legs”, say the Germans. We live in the information era, and for each Lou Dobbs or Jean-Claude Barreau who try to instill fear, there are thousands of voices to help reestablish the truth. I am certainly not the only one human being doing regular business with Chinese companies to have always received payments in due time.

We cannot let fear drive us. China is emerging as a world leader, but we certainly have in the US what it takes to acknowledge this situation and get the most out of it in order to retain our overall leadership. Needless to say, I am talking here about peaceful solutions!

Business, China | No Comments »

Outsourcing companies have traditionally been focusing on large contracts (i.e. multi-years, multi-million dollars). Thanks to the emergence of new destinations in the offshoring industry, like China, outsourcing vendors have started to discover the virtues of the SMB market, which is good.

But it still leaves one major segment to be addressed yet: the long tail, one of the largest ones, but certainly a tough one for vendors to address successfully.

Mary Trigiani sent me a link to an article called “Ooohs! & Aaahs?!! of Outsourcing” and posted by Ilya Lichtenstein on www.foundread.com.

In a nutshell, the post relates the experience of an individual who picked a freelancer on Internet to develop a very small application (40 hours of development).

I recommend reading the post [Ooohs! & Aaahs?!! of Outsourcing]..

Individuals as described in the abovementioned post, together with a myriad of small projects within organizations of all size, are just below the radar screen, and therefore invisible to larger providers.

Some companies (eLance, Guru, etc.) have been targeting this segment, relatively poorly in my opinion, since selecting a good provider looks like playing lottery; the same goes for freelancers, who are often faced with people with no significant experience of subcontracting. At a glance, these first-generation companies provide a list of freelancers and projects, a secure payment system (not guaranteed) and a rating system.

A second generation of solutions led by oDesk provides additional tools to secure the relation between suppliers and clients (basic matching system, secure work environment, guaranteed payment, etc.).

I am still unsure about this format. People with projects are snowed under with potential providers from all sizes; providers have a similar problem, as there is still very little information available about their potential client.

In a way, these sites have problems similar than dating sites’, which is to match efficiently and rapidly requests with a few best offers. A major difference with dating sites is that users are certainly not to devote the same amount of time and energy finding an outsourcing match, as they would do finding a personal companion. I have been using some of these sites for a while but I finally gave up, since I found the results were not worth the effort. That said, I do not want to generalize since there are many positive experiences too.

Outsourcing vendors could offer a very valid alternative to these sites. In fact, customers would benefit from the various commitments a larger company can make (replacing / adding resources, methodology, warranty, etc.). Moreover, the relatively low cost involved in promoting this activity would result in a lower overhead, and therefore a better price/quality ratio.

Emerging leaders would be perfect candidates to make the required changes in their organization to tackle this activity successfully, which yields me naturally to look at China. I am watching carefully a few cases to see how they will develop. Stay tuned.

Business, China | No Comments »

I discussed this morning with the CTO of a Silicon Valley based WEB 2.0 company, whose entire development team is outsourced to Venus Software in China.

I asked him about which project management solution he was using. I was more than surprised and intrigued when he told me he was not using any.

In fact, the development team uses an Agile development method called SCRUM
[SCRUM page on Wikipedia] and according to him, it renders the use of a tool like Ms Project obsolete.

He could certainly sense that I was not really convinced and let me connect into the online “development place”, in fact a series of integrated blogs and wikis that are used by the team members to meet, exchange information, post results, hold their project reviews, etc.

It works! The productivity is at its best and the developers over-motivated.

I am really inclined to push for generalizing this environment to more of our clients who work with Agile techniques.

And it makes me smile when I read in some not-so-well documented articles that only low-level IT work can be outsourced to China.

The time has come to kick out some old habits, and a good start might be to kiss your project management tool good-bye!

China, Technical | 1 Comment »

Sure, green has become the new gold of California, and this time, it is worth digging!

For the past few months, my inbox has been clogged by invitations to attend seminars or events on greentech, not really my main focus since I am in the software business.

John Doerr, one of the most respected and powerful VCs of the Silicon Valley, has two major powers: the power of influencing the local VC community, which I assume is the largest in the world, and the power of influencing local industry leaders, and there is aplenty here in California.

Listening to his speech is a MUST, so I am not to repeat here much of what he said

However, I cannot resist sharing a few excerpts:

- The best way to predict the future is to invent it; the second best way is to finance it.
- Going green is bigger business opportunity than the Internet. It could be the major industry of the 21st century.
- Entrepreneurs do more than anyone thinks possible with less than anyone thinks possible.

And it works!

California was the first state in America to mandate a 25% reduction of CO2 by 2020, thanks to the efforts of Doerr’s lobbying group.

Local VCs are investing massively in greentech ventures, and large corporations are following. I remember attending an event at Stanford last November, during which Charlie Rose interviewed high-tech leaders, including Gates and McNeally (not at the same time, thanks God!). They all talked about how their company was moving toward producing more “environmental friendly” solutions, and more generally becoming greener. People like Doerr have the power to influence Sun of course, but also HP, Intel, Google, Ebay, etc.

I cannot resist commenting on what Doerr says about Wal-Mart’s massive investments toward greentech, especially since Wal-Mart is not really my role-model company. If Wal-Mart has engaged massively into greentech, it sure means to me that companies can increase their profit while saving the planet, a win-win situation!

It is more than urgent to stop saying that global warming is a hoax and start acting. Be part of the Silicon Verde!

Business, Personal | No Comments »

The competition between China and India is heating up at all levels, including outsourcing. We can see a direct consequence in the media that are now relaying quite often opinions of outsourcing leaders, who of course defend their corporate points of view.

An article published by the Financial Times on April 25, 2007 illustrates perfectly my point (“High China staff costs prove hurdle for TCS”). In this article, Executives at Tata Consultancy Services were quoted saying that for many senior positions, engineers can command 50-70 per cent more money in China than in India.

This is to me the perfect example of corporations using the media to leverage their corporate messages. Do not get me wrong; I understand this practice, which is perfectly legitimate. After all, the journalist can perfectly decline to write on a given press communication.

The entire purpose of the blogosphere is to bring a different light to what’s happening in our world. While the media see things from the top, bloggers usually see them from the “roots”. For the average person, getting a better sense of what’s going on certainly requires a subtle reconciliation of the two points of view.
Generally speaking, blogs are very successful because they present a point of view rooted in everyday-life, and not necessarily “politically correct.”

And if it is true that we create our own reality, allow me to stand by mine. Not a single day goes without me speaking to prospects and customers, who are engaged or about to engage in IT outsourcing, in one or more outsourcing countries.

Each point of view is different, but all provide with very valuable information, which I am in turn sharing with the readers.

And the findings are clear. In the Silicon Valley, more and more companies question their current outsourcing source, and generally redirect their outsourcing strategy to China. Is it going to yield China to take over leadership over India? Future will tell, but all this noise is a sign that China has become a contender strong enough to cause their competitors to take serious actions, and I am afraid this is only the beginning.

Business, China | 1 Comment »

Almost a year ago, I updated my billing address from the Internet site of my credit card company. While the correct address appears on the WEB site, the monthly statements keep going to my former address!

I finally decided to call their customer service department to report the problem. As with most of the customer support numbers of Corporate America, the 800 took me directly to Asia. By the way, when I say directly …

And that’s when the pain starts. There was nothing wrong with the Indian operator; he handled the call the best he could. No, I am complaining here about the American Fortune 500 companies, which have become obsessed exclusively by their profitability.

The companies, which believe that offshore’s only purpose is to increase profitability, are plain wrong. Offshore should be about offering more and higher quality services to customers without spending more money, which is totally different.

Keep your call centers in India if it saves money, but by all means, use a bit of the savings to work on process optimization. It would be great news for the people of this country, who keep witnessing the deterioration in customer services.

I would offer here the comment from Bill Homa, CIO of Hannaford Bros., in CIO magazine. “If you are outsourcing a problem, it will still be a problem.”

And I would even say that it would just make the problem grow bigger.

What a wonderful (flat) world!

Business | 1 Comment »