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China to overtake India as world's biggest supplier of cheap IT talent in 5 years: Vi

Discussion in 'World Economy' started by Naren1987, Oct 13, 2010.

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  1. Naren1987

    Naren1987 Captain SENIOR MEMBER

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    It's not a position every CEO would want to be in - in front of a 5,000 strong audience of regular employees with a license to speak their mind.

    But for Vineet Nayar of HCL Technologies, the number five Indian IT services firm, the annual townhall is an opportunity to feel the pulse of the employees, and of course, share his own concerns with them. Among the biggest priorities are dealing with the rise of China and the western IT supermarkets.

    "This is the year in which we have had the highest proportion of questions related to strategy.. and the lowest on HR," says the 56-year-old CEO who has relentlessly pushed for 'transformative' change in the organization after taking over five years ago. Unlike the leaders of bigger peers like TCS and Infosys, Nayar has always seemed like a man in a hurry, even a bit paranoid. While other CEOs have maintained an appearance of confidence and calm, Nayar has always jostled with his organization for change, and the abundance of strategy-related questions from employees seemed to underline his concerns.

    HCL, like Wipro Technologies, has always been after the 'next paradigm', and the anxiety of the employees on surviving their company's positioning was just what Nayar seemed to be looking for. "China is the biggest threat to Indian IT industry," he says, dismissing objections that India's northern neighbour still has IT service firms that are midgets compared to HCL. The annual increase in employee wages in India, he says, will soon see China usurp India's position as the source of the cheapest IT engineers in the world.

    "They are where we were 10 years ago.. Nobody believed we could do it in 2000, so we were under the radar. Suddenly, by 2005, we burst upon the scene with multibillion dollar companies," he reminds, adding with confidence that by 2015, China will be the default destination for low cost IT workforce.

    "GE's recent announcement is a good indication," he says, referring to the American giant's prediction that it sees its future outsourcing evenly balanced between India, China and Latin America. At present, GE, credited with having kicked off the outsourcing revolution in India 20 years ago, currently diverts about 70% of its considerable outsourcing and offshoring needs to India.
    At the end of the next five years, Nayar says, HCLT will not have any revenues coming from the time and material contracts, under which companies pay their vendor based on how many people are working on its support services. Such an approach, he believes, has discouraged IT service providers from increasing their efficiency by using automation.
    "In the past, companies have thrown more and more employees at problems," tells another employee who was worried about project teams not using the correct software tools and relying on spreadsheets to keep track of their activities. Time and material contracts currently account for around half of the revenues of big Indian IT firms, down from around 90% ten years ago.

    In another five years, Nayar says, IT will be treated completely as a utility, provided by vendors who charge per transaction irrespective of how many people and effort are deployed on the contract. If the proper technology and tools are used, the amount of work currently being done by 100 people can be done by 20, he points out.

    "In five years, we would have dramatically changed to become a utility," he says, pointing out that if the employees of HCL do not cut costs by using tools and machines, "someone else will."

    The formation of IT super markets -- such as the acquisition of service firm EDS by HP and Perot Systems by Dell -- points in the same direction, he points out.

    Like Infosys, which wants companies to outsource entire departments to it instead of just the IT department, HCL's bleeding BPO business will play a crucial part in the new offering. The unit, which has been bleeding for several quarters, is at the threshold of achieving the transformation, he assures his employees. Around 8,000 of its 70,000 employees have been taken over from the clients as they outsourced entire departments for HCL to run and manage.
     
  2. Guynextdoor

    Guynextdoor Lt. Colonel SENIOR MEMBER

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    Mee how im yu yuan yu yuow. Mi Yum hi youw. ling shing mi hum hum tiao.
     
  3. prototype

    prototype Major SENIOR MEMBER

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  4. Trident

    Trident FULL MEMBER

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    theres nothing to laugh about it...its true that they are working to be one of the low cost it destinations along with some other countries which pose a serious challenge to India. may be not in 5yrs but atleast a decade.
     
  5. Guynextdoor

    Guynextdoor Lt. Colonel SENIOR MEMBER

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    ^^^:lol: You got it wrong dude, I wasn't laughing at them. I just decided taht since we'll have to see so many of them from now on...i'd better start pracising my chinese...:lol::smokin:
     
  6. Dilemma

    Dilemma Captain SENIOR MEMBER

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    The biggest hurdle for China to overcome has been the language barrier. I'm pretty sure in the next 10 years, China will be the biggest exporter of IT services.
     
  7. johnnelvine

    johnnelvine REGISTERED

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    Re: China to overtake India as world's biggest supplier of cheap IT talent in 5 years

    I had gone through the site. The technologies and the services are increasing day to day. The number five Indian IT services firm, the annual town hall is an opportunity to feel the pulse of the employees , and of course , share their own concerns with them,. Among the biggest priorities are dealing with the rise of China and the western IT Super markets. In five years, we would have dramatically changed to become a utility ," The information of IT supermarkets such as the acquisition of service firm points in the direction. Please produce some information links for the detailed view of the site.



    metropolitan area network solutions

    sip trunking services
     
  8. uptotrix

    uptotrix Captain SENIOR MEMBER

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    Re: China to overtake India as world's biggest supplier of cheap IT talent in 5 years

    Many Indians get training on accents at call centers, which is a good thing. I don't think there is a any danger of China takeover, the income levels in China are going up in the manufacturing pool so it sort of balances itself, India long ago had given up the idea of being the IT hub. We have to focus on professional IT services and manufacturing, it has already begun.
     
  9. Manmohan Yadav

    Manmohan Yadav Brigadier STAR MEMBER

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    Re: China to overtake India as world's biggest supplier of cheap IT talent in 5 years

    Yea, Right.

    They hardly tech English in China.
     
  10. olivers

    olivers 2nd Lieutant FULL MEMBER

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    Re: China to overtake India as world's biggest supplier of cheap IT talent in 5 years

    Well the move away from T&M contracts to fixed price contracts is a phenomenon we are seeing.It's a worry for the industry, think about it. All the IT companies today make huge profits and are becoming behemoths. Most of this is from T&M contracts or was.

    Now they will allocate any amount of work and ask you to finish it for $x. Most Indian firms just use pure numbers to make up for the low hourly rates they offer. Use 50 people @ $20/hr instead of 10 @ $70/hr. You end up making more. You keep doing it, these people get weary. They want you do do everything at $1000. It's ok if the contract is well defined. Otherwise you will end up working on a $10,000 job for $1000. Yep it's already happening.

    Anyways, on China's rise, some of our IT biggies are already recruiting in China and have big centers there. Yep, we are aiding china in it's rise to take over the IT space. You know how the Chinese work right?

    Invite foreign companies to setup facilities. People work there. Then they start their own firm with stolen clients and experience. The story of China. They will do it to the Indians too. Don't worry Anil from RIL has got China position and also loans from China. He will only use Huawei equipment for telecoms so that all things can be intercepted by China. UK, US most of Europe doesn't let Huawei sell telecom equipment.

    On language. English is taught in all Chinese schools from the lowest grade. They want to make them drones, china isn't averse to anything that can help their children become drones. They even sing English songs and so on. This was implemented way back in 2000. Just a few more years before these kinds are in universities in China. So our advantage on this front is almost over. Yep the IT threat is real and it's aided by our own IT companies.
     
    Last edited: Apr 26, 2012
  11. tangocharlie

    tangocharlie Lieutenant SENIOR MEMBER

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    Re: China to overtake India as world's biggest supplier of cheap IT talent in 5 years

    Its very hard to replace Indian companies in terms of outsourcing, there are many ground as I working among one of the MNC which is doing the same type of business from past many years.

    1. The linguistic problem which Chinese had, US is more concern about communication skills. They tried to setup the same business in Thailand but failed terribly. In the last they shifted them back to India.

    2. Indian companies has vast experience in terms of outsourcing, they have well establish R&D and talented pool of people and bench strength. Like HCL always have 500 People on bench to placed in new projects.

    3. The availability of enter pruners, which China is seriously lacking.

    Its very hard to replace India in this business. I had seen the growth of IT outsourcing from past 6 years and all MNC's support running from India.
     
  12. olivers

    olivers 2nd Lieutant FULL MEMBER

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    Re: China to overtake India as world's biggest supplier of cheap IT talent in 5 years

    Deleted.
     
  13. Marqueur

    Marqueur Peaceful Silence ELITE MEMBER

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    Re: China to overtake India as world's biggest supplier of cheap IT talent in 5 years

    this is impossible in 5 years ... if they r starting now ... china need atleast 10 to 15 years ... they have to start at grass root level ... introduction on english language in KG
     
  14. Blackwater

    Blackwater Captain SENIOR MEMBER

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    Re: China to overtake India as world's biggest supplier of cheap IT talent in 5 years

    FOR THE LAST 10 YRS CHINESE HAS Imported many English teachers from UK,OZ,Canada,USA to teach English to their govt officials and cooperate leaders. My friend from India also teaching English to chinis for the last 5 yrs now married to a chini.

    still English has not been officially introduced in schools.
     
  15. olivers

    olivers 2nd Lieutant FULL MEMBER

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    Re: China to overtake India as world's biggest supplier of cheap IT talent in 5 years


    Wrong. Just a visual rebuttal. It's an example of how English is taught. One of the videos is an exchange trip, not so relevant.
    Teaching Kindergarten in China (ages 3-4) - YouTube
    China Prep: Teaching English to Chinese Kids in Dada Village - YouTube

    Remember, China is where it is because of the government. India is where it is in spite of the government. This is our success model, an ant hill.Complex, independent and adversity resistant. China is a top down model planned, inspiring, efficient but subject to rigid control.

    English is required in all schools in China. English is a subject on graduate tests to get to college. English is required for promotions in jobs. English is required to get admission to medical schools.

    The efficacy of these methods is under question.For example, if you take the course from the organization which administers the medical english entrance test you always pass. There are allegations that people just memorize certain answers and get the required grades. Yep, the officials are given a "sample" question paper. They get back for the exam and it's almost the same question paper, with a few changes.
     
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