送交者: slashdot 于 2005-2-18, 16:45:17:
For people that are interested in going back to China for the outsourcing business. What's omitted from the report is the fact that major Indian outsourcing companies have all landed in China. For at least a while they will compete in a different segment, i.e. big projects, but it almost keeps a cap on how much Chinese companies can grow if they don't consolidate. Besides, IT is not the only industry to be outsource, others such as call center, pharm etc, are almost certainly out of the reach of Chinese companies due to language and educational background issues.
http://www.mckinseyquarterly.com/article_page.aspx?ar=1556&L2=4&L3=115&srid=7&gp=1
(may need free subscription)
Can China compete in IT services?
Fragmentation is keeping the country’s industry from grabbing a larger share of the global software-outsourcing market.
Giuseppe De Filippo, Jun Hou, and Christopher Ip
The McKinsey Quarterly, 2005 Number 1
China's spectacular economic success has prompted speculation that the country's software-outsourcing industry could soon compete with India's. A recent McKinsey study of China's software sector,1 however, shows that it will be many years before the country poses a threat to its continental rival in this arena. For starters, the Chinese must consolidate their highly fragmented industry to gain the size and expertise needed to capture large international projects. Currently, there is little movement in this direction.
To be sure, signs of healthy expansion abound in China's IT industry. The number of engineering graduates and software-applications professionals has grown considerably in recent years. Since 1997, annual revenues in software and IT services have risen by 42 percent a year, on average, reaching $6.8 billion in 2003.2 Moreover, the number of English-speaking graduates in the workforce—particularly crucial in software outsourcing—has doubled since 2000, to more than 24 million in 2004.
But shortcomings in the structure of China's IT industry prevent it from taking full advantage of these changes. Although revenues from IT services are rising, they are barely half of India's $12.7 billion a year. Growth is driven by domestic demand—most customers are small and midsize Chinese enterprises that want their software customized to their own needs. Moreover, the country's nascent foreign-software-outsourcing business accounts for just 10 percent of the industry's total revenue, compared with around 70 percent for India. Japanese customers, which seek mostly low-value application-development contracts rather than more lucrative ones for design, supply about 65 percent of this sector's income. And despite lower costs, operating margins in Chinese software-services companies average only 7 percent, compared with 11 percent at similar companies around the world, because many projects are below optimal scale, suppliers often compete on price, and collecting payments can be problematic.
To compete effectively in global outsourcing, China's software industry must consolidate. The top ten IT-services companies have only about a 20 percent share of the market, compared with the 45 percent commanded by India's top ten. Furthermore, China has about 8,000 software-services providers, and almost three-quarters of them have fewer than 50 employees. No company has emerged from this crowded pack; indeed, only 5 have more than 2,000 employees. India, on the other hand, has fewer than 3,000 software-services companies. Of these, at least 15 have more than 2,000 workers, and some—including Infosys Technologies, Tata Consultancy Services, and Wipro Technologies—have garnered international recognition and a global clientele.
Without adequate scale, Chinese players are unlikely to attract top international clients. In general, smaller companies are riskier and less reliable partners. They are more vulnerable to the loss of key personnel, may not have the financial muscle to survive for the duration of a project, and often don't have the capacity or breadth to absorb large projects easily. Yet our study shows that only about 12 percent of Chinese software-services providers see mergers, acquisitions, and alliances as a priority (exhibit). Managers in China have little M&A experience, and although the culture tends to favor organic growth, relying on it to counter new competitors isn't realistic. Meanwhile, several Indian companies are considering acquisitions of Chinese firms to expand their operations.
Fragmentation exacerbates the Chinese industry's other problems, including weak process controls and product management. Only 6 of China's 30 largest software companies are certified at levels five or four of the capability-maturity model (CMM);3 by contrast, all of the top 30 Indian software companies have achieved these rankings. About a quarter of the Chinese companies we surveyed are trying to implement the CMM quality standards, but more than half of the companies in the survey said that such efforts weren't necessary, feasible, or worthwhile.
Chinese software-services providers will also have to manage their talent much better. Most do little to develop their employees, and very few use stock options, training programs, or other incentives to build talent. Among the companies in our sample, annual employee turnover was about 20 percent, compared with an average of 14 percent in the United States, which itself has a very fluid IT labor market. Scale would help—larger companies tend to attract more interesting projects, provide better training opportunities, and offer more generous incentives. All make it easier to attract and retain workers with valuable technical and linguistic skills.
With greater size and an improved talent base, Chinese software-services companies will be in a better position to address other issues, such as building credible brands in international markets and developing knowledge of specific industries, including finance and pharmaceuticals. Organizational and operational changes are also needed to protect the intellectual property of clients. Last, most companies will have to abandon their project-based mentality and adopt a new focus on giving clients long-term value.