Tuesday, September 07, 2004

[news] Grudge Match: China vs. Europe + "It's Malaysia Time ..."

Tuesday, September 7, 2004
Dateline: China
This week marks the debut of my bi-weekly (or so) column for the AlwaysOn Network, Silicon Valley's premier online social networking venue (and unofficially linked to Silicon Valley's premier in person social networking venue, the Churchill Club; I'm a member of both).  I will be sharing "Letter from China" columnist duties with Paul Waide, the head of Pacific Epoch, a Shanghai-based boutique consultancy that advises hedge funds on alternative investments in China.  My first column is on Shanghai and a couple/few forthcoming columns will examine cultural differences between Chinese Nationals, Chinese-Americans and Anglo-Americans, especially within the context of IT and IT marketing.  I will post my AlwaysOn "Letter from China" columns to this blog/e-newsletter, although please be advised that my intended audience are readers based in Silicon Valley.
Grudge Match: China vs. Europe
Staying on topic, I'd like to make a comment about a recent "Grudge Match" on the AlwaysOn Network.  See the item marked "Grudge Match" for 08.05.04 (5 August 2004) at http://www.alwayson-network.com/polling/index.php .
In the referenced "Grudge Match," China was pitted against Europe.  China received 45% of the votes in contrast to Europe's 55%.  Frankly, I'm surprised that China did so well.  I've found that the AO "Grudge Match" results tend to indicate sentiment more so than reality.  For example, a recent match pitted SpaceShipOne against NASA and SSO absolutely clobbered NASA (besides, perhaps most of the votes for NASA came from either Ames or the Blue Cube).  Of course, SSO is a high school science experiment compared to what NASA is doing, but I believe the results accurately reflect sentiment. 
But what is amazing (to me, at least) is that China was pitted against Europe in the first place!  Let's face it, this is a rather goofy "grudge match."  For Europe to include First World nations such as Germany, France, the U.K., Ireland, Italy, Switzerland, the Netherlands, Belgium, Sweden, Finland, Norway, Denmark (yes, some countries are intentionally left out) -- and to compare the collective whole of First World Europe (a.k.a. "Western Europe") to China is absurd.  If this was First World Europe vs. China circa 2020, okay.  But TODAY?  Yet, the sentiment indicator showed a strong vote in favor of China.  Europe "won," but barely.
I propose the following "grudge match":  China vs. "Eastern Europe" (i.e., the former Soviet Bloc).  Look, if China can do so well against Europe as a whole (including First World Europe), I'm sure China would absolutely kick Second World Europe's butt!!  And a China "grudge match" against Eastern Europe more accurately reflects current "history."
But even this is a bit misleading.  The real "grudge match" is this:  China + India vs. Second World Europe.  And given this choice, only someone stranded on Mars for the past decade might choose Second World Europe.  Yet, this is the real so-called "grudge match."  First World Europe is in descent, to be sure, but it's descending from a high altitude.  It will take at least a decade or two for China (and/or India) to truly match First World Europe.  But China ALREADY is superior to Second World Europe.  And don't rant about NATO and EU memberships; this is simply window dressing.  Then combine China with India versus Second World Europe, playing into my "Golden Triangle" theme, i.e., it's all about the U.S., India and China.  This is where the action is, ESPECIALLY in IT.
"It's Malaysia Time ..."
I must be getting punchy since I'm borrowing a theme from a beer commercial, but it seems that Malaysia is experiencing its 15 minutes of fame.  The Philippines has recently been "hot," and several articles of late have been touting Malaysia (see, for example, an article which appeared in Space Daily).  Frankly, I'm getting tired of all this nonsense.  Look, when it comes to ITO (IT outsourcing) in East Asia, there are just two choices, i.e., India and China.  And, it's not really a competition; both have their strengths and weaknesses.  A few crumbs to Singers (Singapore), maybe even a few crumbs to the Kiwis (New Zealand).  The Philippines deserves notice, albeit passing notice, and Malaysia might be okay for some BPO.  But ITO?  Come on, give me a break!!  See my Furl archive for more links.
The only thing I recently found interesting regarding Malaysia was an article on Satyam's IT boot camp in Malaysia.  This isn't really unique, after all, IBM has been doing this sort of thing for decades.  So does HP.  Kind of like training plus a bit of brainwashing, but the brainwashing is acceptable since it includes political survival skills -- and said skills are essential, especially in F500 corporations.  But I like the idea of SI (systems integrator)-based training:  This way SIs can focus on "real" versus theoretically perceived needs.
IT Tidbits
Which certifications have the best ROI (return on investment)?  Playing off the idea of SI-based training, which are the most important certifications?  Well, Cisco leads with three out of the top five, although Microsoft picks up a couple of "wins" when looking at fastest-growing ROI, with RedHat and Oracle getting one win each.  SIs in China may also want to benchmark how much U.S. employees are paid given a certain certification, e.g., Microsoft DBAs receive an annual average salary of US$80,600.  Think about how much SIs in China pay for a certified Microsoft DBA.  For example, what do they get paid in Jinan -- or even in Dalian?  Compare this to US$80,600.  Spot any opportunities?  See http://tinyurl.com/3nvpz and http://tinyurl.com/6r2s5 .
ITO in the news.  Two particularly noteworthy items.  First, ITO got Slashdotted.  The Slashdot links are worth a review.  Probably some good insight into what American software engineers are thinking and feeling.  The second is a review of Lou Dobbs' new book on ITO and BPO.  Mr. Dobbs is a well-respected host on CNN; his views shouldn't be taken lightly.  A couple of excerpts from the review:
"GE, as Dobbs makes clear in abundant detail, is only one of many companies outsourcing high-tech and professional jobs to India and other parts of the world where wage expectations are lower.  Among the others spotlighted by Dobbs for outsourcing jobs to India, the Philippines, Romania, Ireland, Poland and other countries are IBM, SAS Institute, Intel, Microsoft, Perot Systems, Apple, Computer Associates, Dell, Hewlett-Packard, Oracle and Sun Microsystems."  My comment:  Romania is the Changsha of Third World Europe, i.e., their programmers are about as cheap as programmers come.
"'India can provide our software; China can provide our toys; Sri Lanka can make our clothes; Japan make our cars.  But at some point we have to ask, what will we export?  At what will Americans work?  And for what kind of wages?  No one I've asked in government, business or academia has been able to answer those questions,' Dobbs writes."  See the review in the Tallahassee Democrat or my Furl link .
So-called infrastructure vendors beat out app vendors in terms of their ability to meet expected ROI and TCO (total cost of ownership) levels.  I don't really like the way infrastructure and application vendors are defined in this article and related survey, but top honors go to IBM and Microsoft.  There's a lot being written between the lines, but in general this plays into my "build-to-a-stack" strategy, albeit Oracle is left behind.  See http://tinyurl.com/3tpjo .
New marketing technologies.  Interesting article from the premier issue of CMO (Chief Marketing Officer).  There are two ways to view this:  1) which marketing technologies can be used by SIs in China for their own marketing endeavors, and 2) which marketing technologies will likely be adopted by retailers, e-commerce sites, financial institutions and numerous other sectors -- and which in house skills does an SI in China need to implement these new technologies (all of which are IT-related)?  See http://tinyurl.com/57wvp .
Looking for partners in the utility computing space?  For a start, try the top 25 vendors.  (See http://tinyurl.com/48s9j .)  Yankee gives a quick look at utility computing ROI (see http://tinyurl.com/5fw88 ).  HP chimes in with their take, too (see http://tinyurl.com/58mhg ; it's a PDF).
The battle of the SI globals.  Two related articles both based on the same Forrester report.  (See http://tinyurl.com/6tfrn and http://tinyurl.com/5tljq .)  Issues being considered include scalability (i.e., handling US$100+ million accounts), the need for broad offerings (e.g., strategy consulting) and expanding geographical presence (hey, where is EDS in China?).   "(T)he (Forrester) study finds that Infosys and Wipro have melded together a mix of CMMI, P-CMM, Six Sigma and ISO 9000 to create a culture focused on consistent and repeatable processes and value-added tools."  For China's SIs, mostly food for thought -- and a bit of dreaming.
... and how to battle the globals.  The article was a bit silly, after all, G2000 firms joining forces to battle Accenture or Infosys doesn't really fit the notion of smaller firms joining forces.  But I believe that they're on the right track and that a myriad of partnerships will be formed to most effectively capture new business and battle the globals.  However, ISVs (independent software vendors) have to walk a very fine line.  SIs need to carefully consider ISV responses and existing alliances.  See http://tinyurl.com/7xj82 .
"Infosys to set up second outsourcing facility in China."  The article states that Infosys is running out of space in their Pudong facility and that they're scouting for additional digs.  Come on, guys, running out of space?  There's not enough space in the Shanghai Pudong Software Park?  I don't think so ...  The reality is that Infosys needs to find lower cost developers.  As my column on Shanghai for AO's "Letter from China" notes, developers in Shanghai are a bit pricey compared to other places in China.  Infosys China is primarily servicing their global customers in China and looking for high-end integration within the domestic market.  However, this is a tough nut to crack and Infosys will need another development center to lower their overall costs -- and this is why they are looking for additional space IN ANOTHER CITY.  The idea that they're running out of space in the SPSP is ridiculous.  (I've been to their Shanghai digs ...)  See http://tinyurl.com/6nz8d .
Zensar gets broader press coverage.  Kind of like watching a meme, a couple of non-Indian IT trades have picked up the Zensar/Broadengate announcement.  See http://tinyurl.com/65afx and http://tinyurl.com/3jh2r .
"Rethinking the business case for Java."  A good article.  Hmmm ... maybe not much of a case, eh?    Hey, I'm still a believer.  See http://tinyurl.com/5hbcn .  Of course, Java programming ain't what it used to be ...
"The selling of SOA."  Two-part series in Line56.  SUPERB!!  (I prefer the singular to the plural, i.e., "architecture" versus "architectures"; personal preference.)  Reviews various viewpoints on SOA.  See http://tinyurl.com/6xqdn and http://tinyurl.com/6tw9o .
Urls update.  Expect to see lots and lots of stuff on software engineering and development.  Great stuff, too!!  Later this week.
David Scott Lewis
President & Principal Analyst
IT E-Strategies, Inc.
Menlo Park, CA & Qingdao, China
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