Outsourcing coming to China

[Phlegm]

The article is from the San Francisco Chronicle:

In an agreement that underlines the growingly global nature of the technology industry, Microsoft Corp. is teaming up with the Indian outsourcing firm Tata and the Chinese government to form a software company in Beijing.

The joint venture, announced Thursday by Microsoft Chief Executive Officer Steve Ballmer along with representatives from Tata and various Chinese government-owned entities, will provide technology outsourcing services both to the global market and domestically in China, beginning in 2006, the group said.

The announcement comes at a time when offshore outsourcing has become increasingly important, and controversial, for the tech industry. In recent years, Tata and other Indian firms have grown rapidly by taking on U.S. clients' technology work such as software programming and maintenance and performing it in India, where wages are much lower than they are in the United States. Chinese companies have also performed international outsourcing, but China has lagged behind India, where many workers speak English and companies have already forged relationships with international clients.

Observers see the deal as a validation of China's growing role and an opportunity for China to catch up more quickly. But the benefit to the Indian and U.S. companies -- which will be minority investors in the project, according to the announcement -- is less obvious.

Tata said the agreement is just the latest step in three years of doing business in China, which has included setting up an engineering center in the eastern city of Hangzhou and collaborating with several Chinese universities. The company sees China as a good base for servicing multinational clients with operations all over Asia, including in Japan and South Korea, said John Lenzen, Tata's vice president of marketing.

"China will also serve as a significant talent base," Lenzen wrote in an e-mail interview with The Chronicle. As more multinational companies have set up programming facilities in India, competition for skilled workers has caused wages there to rise rapidly. Setting up operations in China, which has 50,000 new technology graduates every year, may help Indian companies such as Tata keep their prices low.

Other Indian outsourcers are also expanding into China, often citing the large number of technology graduates available there.

But Vivek Paul, outgoing president and vice chairman of rival Indian offshoring firm Wipro, warned that in partnering with China, Tata may be hurting itself by "breeding its future competition." Paul said Friday he is leaving Wipro to become a partner in the investment firm Texas Pacific Group.

Wipro also talked with China's National Development and Reform Commission about a possible joint venture, but failed to strike a deal, Paul said.

The Microsoft deal could accelerate the flow of skilled technology jobs from the United States overseas, warned researcher Ron Hira.

"(China's) talent will come online much faster as a result of this joint venture. This is more bad news for U.S. IT workers. It is more competition ... for them, coming on sooner rather than later," said Hira, co-author of "Outsourcing America: What's Behind Our National Crisis and How We Can Reclaim American Jobs."

In April, Chinese Premier Wen Jiabao visited India's technology center, Bangalore, including a stop at Tata's software development center there. He urged the countries to combine their strengths to form an Asian technology powerhouse, according to media reports.

Microsoft provided little information about why it was investing in the venture, except to point to a 2002 memorandum of understanding it signed "for supporting the development of China's software and IT industry."

Those who have already placed their bets on China cheered the development.

"We think it's validation of China's emerging position as a leader in technology services to the rest of the world," said Ramsey Walker, co-CEO of San Francisco's Freeborders, which outsources software work to China.

But even with the Tata joint venture, China faces challenges in becoming a software outsourcing powerhouse. The main hurdles are language and intellectual property concerns. Despite required English classes in schools, fluent spoken English is not nearly as common in China as it is in India, a former British colony. And for many U.S. businesses, the rampant piracy in China is a good reason for proceeding slowly in moving software development there.

"It's a society that hasn't shown yet an ability to control intellectual property theft," said Bruce Chizen, CEO of Adobe Systems, in an April interview. "And quite frankly, that's in contrast to what we've experienced in India."

[dammuzis]

guess its time to learn chinese and move if you want a job

[Narrock]

Or change majors in college. There's only about 56,000 other things someone can do besides "computer science" related work.

[Captain Insano]

Oh boy... America is in for it... eventually.

Lets get started....


First, China is the world's manufacturing powerhouse already. They can now own property and as a result many dinks are becoming very very wealthy. These wealthy chinks are beginning to dump millions into R&D, medical research, engineering, you name it....

In other words, they are dabbling in the kind of thing that America used to have a complete monopoly on.

To top it off, they are hungry...

Think Rocky versus Drago...

Drago, once a nice blonde haired youngster, has grown up and is a big bully and he loves communism and is the man in charge.... Much like liberals in America.

This big bully has pissed off Rocky ie: China, and China (currently the underdog) is out to be the champ.

Add these things up and I think America is going to go down for the big loss in our lifetimes.

China is eventually going to get their shit together regarding intellectual property and its going to become very profitable for them to innovate, invent and engineer. When that day comes we are fucked.

I can tell you from experience that American companies fucking suck assnuts. American corporations are bloated, inefficient, slow and have terrible service.

A perfect example comes to mind....

In Entrepreneur magazine there was a story about a guy who invented a cutting device to get through those obnoxious sealed packages that surround small electronics and such...

He took his plans to all the major manufacturing companies in America and was told that he wouldn't have a prototype for 12 months.

So he takes the thing to Taiwan and they have him a working prototype 3 weeks later...

Would you like to wager a guess where the thing ended up being manufactured?

In my opinion its going to take the next depression and the middle class getting completely wiped out before either:

One, we become a total socialist state.

Two, America realizes that globalization wasn't necessarily a good thing (cong liberals) and that we have fierce competition now and its going to take drastic action and change to once again compete... (like beating children in school who act up and refuse to learn, so that can compete with the chinese kids).

[Lyion]

My only gripe is the title of this thread should be outsourcing GOING to China. Coming would imply we are Chinese.

Unless this thread was started by someone in Shanghai.

Eventually the outsourcing will reach back here. Microsoft outsources to India, who outsources to Russia, who outsources to China, who outsources to Virginia. It'll be just like government aid, without government intervention!