Comments on: Predictions for 2008 http://chinaoutsourcing.blogsome.com/2007/12/30/predictions-for-2008/ Successful Outsourcing to China Tue, 29 Dec 2009 16:04:25 +0000 http://wordpress.org/?v=1.5.1-alpha by: deans http://chinaoutsourcing.blogsome.com/2007/12/30/predictions-for-2008/#comment-25 Sat, 05 Jan 2008 16:55:29 +0000 http://chinaoutsourcing.blogsome.com/2007/12/30/predictions-for-2008/#comment-25 The Chinese government recognized that this could be an issue several years ago. As a result, they made a concerted effort to produce trained software people. Some of their specific programs include encouraging software engineering and IT programs at universities as well as establishing a national system of "Software Institutes" that retrain graduates from other fields to become programmers. It's hard to get accurate numbers, but my best guess is that the country is currently producing more than 500K new programmers/software engineers every year. The big gotcha is that most of these recent graduates aren’t really suitable for being deployed on outsourcing projects for western clients. While the newly educated engineers often have a good theoretical foundation, they generally require a substantial training period to develop practical skills and to learn how to work with clients. Most of the good Chinese outsourcing companies will spend at least 3-6 months training new graduates before they are actually billed to clients. Right now, China does not have a shortage of software engineers / programmers (in fact, I've heard that some recent graduates from less prestigious schools actually have a hard time finding work), but it does have limits on the number of experienced / highly skilled software people. To directly address your question: I believe that the government's effort to build up the software workforce though educational programs has been very effective. The real challenge is in gaining practical skills and developing a client service perspective. China does have some constraints with regards to more experienced engineers and project managers, but clients can mitigate these issues by being selective in the types of assignments given to the offshore teams as well as by working with outsourcing companies that have mixed-shore capabilities. One other thing worth noting is that there are pretty stark regional differences in the software labor pool within China. Both Beijing and Shanghai are experiencing high demand and some resource shortages, while some of the secondary cities, like Chengdu, Xi'an and Wuhan have excess resources. Clients should evaluate their vendor's capabilities for tapping into the resource pools outside of Beijing/Shanghai. Did I mention that I really like Chengdu, although it is rapidly becoming a preferred destination for a lot of leading MNC's? How’s the stove? The Chinese government recognized that this could be an issue several years ago. As a result, they made a concerted effort to produce trained software people. Some of their specific programs include encouraging software engineering and IT programs at universities as well as establishing a national system of “Software Institutes” that retrain graduates from other fields to become programmers. It’s hard to get accurate numbers, but my best guess is that the country is currently producing more than 500K new programmers/software engineers every year.

The big gotcha is that most of these recent graduates aren’t really suitable for being deployed on outsourcing projects for western clients. While the newly educated engineers often have a good theoretical foundation, they generally require a substantial training period to develop practical skills and to learn how to work with clients. Most of the good Chinese outsourcing companies will spend at least 3-6 months training new graduates before they are actually billed to clients.

Right now, China does not have a shortage of software engineers / programmers (in fact, I’ve heard that some recent graduates from less prestigious schools actually have a hard time finding work), but it does have limits on the number of experienced / highly skilled software people.

To directly address your question: I believe that the government’s effort to build up the software workforce though educational programs has been very effective. The real challenge is in gaining practical skills and developing a client service perspective. China does have some constraints with regards to more experienced engineers and project managers, but clients can mitigate these issues by being selective in the types of assignments given to the offshore teams as well as by working with outsourcing companies that have mixed-shore capabilities.

One other thing worth noting is that there are pretty stark regional differences in the software labor pool within China. Both Beijing and Shanghai are experiencing high demand and some resource shortages, while some of the secondary cities, like Chengdu, Xi’an and Wuhan have excess resources. Clients should evaluate their vendor’s capabilities for tapping into the resource pools outside of Beijing/Shanghai.

Did I mention that I really like Chengdu, although it is rapidly becoming a preferred destination for a lot of leading MNC’s?

How’s the stove?

]]> by: The Beer Guy http://chinaoutsourcing.blogsome.com/2007/12/30/predictions-for-2008/#comment-24 Wed, 02 Jan 2008 16:49:18 +0000 http://chinaoutsourcing.blogsome.com/2007/12/30/predictions-for-2008/#comment-24 I saw something in the Economist a few months ago that talked about future concerns for outsourcing to India and China. They seem to suggest that at current rates of growth in the outsourcing market, both China and India won't have enough of a skilled labour pool to support this growth and that it may raise costs dramatically for outsourced IT companies. In their opinion this will happen very quickly, because they suggest that neither country can train workers fast enough. You may have addressed it else where, but is there a skilled enough workforce and education system in China to actually pull off the rates of growth that some people are suggesting? Or will they find themselves in a crunch for skilled IT professionals in a tightening market? Normally India and China are represented as having vast pools of skilled IT people and I haven't seen anything saying that the pool may be considerably smaller than has been represented and that they may have the same challenges in training more people that the US faces. Curious to get your opinion, because it doesn't seem to get addressed much in the debate about IT outsourcing. Thanks. I saw something in the Economist a few months ago that talked about future concerns for outsourcing to India and China. They seem to suggest that at current rates of growth in the outsourcing market, both China and India won’t have enough of a skilled labour pool to support this growth and that it may raise costs dramatically for outsourced IT companies. In their opinion this will happen very quickly, because they suggest that neither country can train workers fast enough. You may have addressed it else where, but is there a skilled enough workforce and education system in China to actually pull off the rates of growth that some people are suggesting? Or will they find themselves in a crunch for skilled IT professionals in a tightening market? Normally India and China are represented as having vast pools of skilled IT people and I haven’t seen anything saying that the pool may be considerably smaller than has been represented and that they may have the same challenges in training more people that the US faces. Curious to get your opinion, because it doesn’t seem to get addressed much in the debate about IT outsourcing. Thanks.

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