Bill Belew has raised 2 bi-cultural kids, now 34 and 30. And he and his wife are now parenting a 3rd, Mia, who is 8.

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Software Industry

India does IT. China is catching up…or, is it?

RNCOS (Research & Consultancy Outsourcing Services) presents these eleven findings on the Chinese Software Industry:

1. China’s software industry has continued to grow rapidly in the last few years.

2. The growth trend is still continuing as more and more companies are looking forward to entered the country.

3. Rapid growth in Internet use will further drive the demand for software that accommodates broadband services, such as multimedia compatible software that will enable users to enjoy broadband contents.

4. Northeast China and East China will become the main drivers of the China software outsourcing market in the next few years.

5. The South of China currently has a smaller market size but is rich in resources i.e. software talent, therefore, its rapid growth will soon be noticeable.

6. The exports are mainly driven by the software business given by Japan.

7. Over 60% of Chinese exports are taken up by Japan.

8. There are good numbers of Chinese who are capable in the Japanese language and can develop software accordingly.

9. It is predicted that in China, Linux market (both server and client) will grow in annual rates of 34%.

10. The client-side share of the Linux market will grow comparatively faster.

11. The enterprise software market including ERP (Enterprise Resource Planning), SCM (Supply chain Mangement), EAM (Enterprise Asset Management), CRM (Customer Relationship Management) and financial software is still very small and hence represents opportunities for future growth.

RNCOS would have us believe that there is still plenty of room for growth and outsourcing to China for software needs not to mention that China may be the better place to outsource software needs for Japanese companies.

What do you think?

Talk to Bill and others about their experiences raising bi-cultural Japanese-American kids.

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Bill Belew

Bill Belew

Daddy and Christian.

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  • As the former VP of Business Development for Worksoft and Beyondsoft, the two largest U.S. focused China-based ITO firms, and as SVP for the outsourcing hub at Tsinghua University, let me chime in with some observations:

    #1, #2, #6 and #7 are a fact. However …

    #3: The growth in broadband may not have a very high impact on the IT outsourcing business in China. It *might*, but this is not a certainty — and there’s little evidence that this is the case right now. (I know of a couple of instances, but nothing statistically significant.) There’s certainly a hope that burgeoning broadband will create an opportunity, but I see many obstacles on the execution side.

    #4: Huh? Northeast and East China, eh? NEVER look at it this way. It’s much more a factor of which cities are players rather than regions. BJ will remain #1. SH and SZ come in next. Then there’s DL, primarily for Japanese clients. Next up: WH, XA, CD. Possibilities: Suzhou, NJ, TJ, GZ.

    #5: Maybe. Maybe not. GZ is certainly making a play in conjunction with HK. SZ is already a player. But a claim of “rapid growth” is far from certain — and not as likely as in other places.

    #8: And they’re all in DL or SH (some in BJ). A “good number”? What does this mean? This seems like an exaggeration sans DL.

    #9 & #10: Wishful thinking … but my wish, too. Little evidence of this. Lots of talk; little action. Microsoft has 100% market share, zero revenues. That’s life in China; get over it …

    #11: Make me fall out of my chair laughing. Can’t build packaged applications solutions if you haven’t used the software in the first place!! Ask SAP how many instances they have of R/3 in China. Then ask how many are supply chain apps. Hmmm … I think we have a disconnect.

    In BPO for English-speaking countries, China sucks. Anybody who speaks English can get a better job than working at a call center. For Asian languages, BPO in China will lead India. Language issue, plain and simple.

    In ITO, for end users … well, don’t bother going there. For ISVs, it really depends. L10N/G18N, sure. Testing, okie, dokie. Open source, embedded, and agile: China is a better option than India. For everything else, get on the next flight to India.

    In ESO (engineering services outsourcing), China will kick India’s butt. I know that NASSCOM is claiming superiority for India in ESO, but it simply isn’t so. India does have strong capabilities, but they can’t touch China.

    Fact: According to a third-party monitoring service, there are more English-language technical conferences held each year in China than in India.

    Fact (and a more important fact): There are over four times as many English-language technical papers published in China versus India. That’s right, over four times as many!!

    Take a look at this:

    4456 records in Inspec for 2005-2007
    ((india WN ALL) AND ((({B}) WN DI) OR (({C}) WN DI) OR (({D}) WN DI) OR (({E}) WN DI)) AND ((PRA WN TR) OR (EXP WN TR))) NOT (THR WN TR) {india} WN CO

    20503 records in Inspec for 2005-2007
    ((china WN ALL) AND ((({B}) WN DI) OR (({C}) WN DI) OR (({D}) WN DI) OR (({E}) WN DI)) AND ((PRA WN TR) OR (EXP WN TR)) AND (({English}) WN LA)) NOT (THR WN TR) {china} WN CO

    There’s proof for you!!

    Regarding IPR issues, I don’t want to lie and say that China is making great progress in IP protection. The problem is somewhat cultural; it transcends anything the government can do.

    Solution: Don’t be an idiot!! Keep all core IP development in your home country; don’t offshore it … anywhere!! But if you’re a SME (small/medium enterprise), look to China for R&D for exploring secondary and tertiary market opportunities that are simply too expensive to explore back home. Let’s take the U.S., for example. The annual fully-burdened labor cost for a Ph.D. is about $250,000. In China it’s less than $50,000 (and I’m being generous in my calculations; a Ph.D. for a top-tier school with a few years experience can often be had for as little as US$18,000 per year … and burden rates are much lower in China, especially in areas with good incentives, like Suzhou, TJ, and GZ).

    SMEs in the States cannot afford to explore secondary market opportunities. But with a China option, exploring secondary markets becomes doable. Often the best bet is to start as an ODC (offshore development center) and then convert the ODC with a BOT (build-operate-transfer) model to a CRC (captive research center). Flip a switch and you go from third-party outsourcing support to a full-fledged research center in China.

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