Software outsourcing breaks out of the "dilemma"

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Software outsourcing breaks out of the "dilemma" [Copy link]

Software outsourcing breaks out of the "dilemma"

2006-6-28

In 2006, software outsourcing will become a hot spot in the market

"There are three main reasons why Chinese software companies' outsourcing performance is not ideal," said Ding Wenwu, deputy director of the Information Products Department of China's Ministry of Information Industry, at the "Celebration Ceremony of the Joint Creation of the China Innovation and R&D Center by Dazhan Group and NETGEAR" a few days ago.

First, China's IT outsourcing market really started in 1998. After 7 years of development, although it has become the most favored market for China's IT service industry, domestic software outsourcing companies have little contact with large foreign companies and do not understand the needs of large companies, resulting in a relatively small user base for software outsourcing services; at the same time, there are few independent intellectual property rights, and they are mainly limited to the support and maintenance of network infrastructure and desktop equipment at the infrastructure level. Second, compared with software outsourcing powers such as India, domestic software outsourcing companies have serious talent loss. Third, domestic software outsourcing companies have not yet thoroughly studied China's software industry policies and have not received more support from the government.

Talent bottleneck

According to statistics from relevant departments, the total value of China's outsourcing and software export business in 2005 was approximately US$1 billion, accounting for only 1% of the global outsourcing volume and roughly equivalent to India's level 12 years ago.

Among them, the shortage of talents has become an indisputable fact that restricts the development of software outsourcing. Some industry insiders believe that with the rapid development of China's economy, the demand for high-end talents is increasing day by day, and it is becoming increasingly difficult to recruit talents in some major cities across the country. The main reasons are from two aspects: first, the competition for talents among enterprises. In the IT industry alone, some well-known multinational companies such as Microsoft and IBM come to China to set up branches, which can absorb hundreds or even thousands of people at a time; second, some well-known Chinese local companies, such as Baidu, Alibaba, Tencent, and Sohu, are also in a period of strong demand for talents; third, Indian companies that feel threatened by competition and set up branches in China are also strong opponents for talents; plus the demand for IT talents by enterprises that provide outsourcing services is also increasing day by day, resulting in a serious imbalance between the supply and demand of high-end IT talents; second, although China currently has sufficient supply of IT talents, there are not many talents with experience and who can take on cutting-edge technology responsibilities.

Under such circumstances, it becomes extremely difficult to rely solely on the recruitment market to recruit talents. Tang Longsheng, president of Dazhan Group China, told reporters, "Dazhan Group is currently inclined to absorb a large number of university graduates with good foundation and development potential, invest special resources in training, and quickly transform into the professional talents that Dazhan urgently needs." This approach is similar to that of Procter & Gamble, which recruits a large proportion of outstanding university graduates, arranges positions according to the principle of "people for the right position" after internships.

"Frankly speaking, the overall strength of Chinese software talents is still not as good as that of India. Although Chinese people work hard, are eager to learn, and have good personal skills, they still lack experience in project management when dealing with formal international companies, and have no channels to improve themselves. Talents mainly accumulate experience through work," said Tang Longsheng.

However, according to the reporter's understanding, many software outsourcing service companies are also facing such a problem, that is, after investing a lot of capital to help employees transform their knowledge structure and enhance their personal value, they are faced with the loss of talent and the dilemma of "making wedding clothes for others".

Seeking differentiated development

According to the prediction of international authoritative organizations, the global software outsourcing market will reach 100 billion US dollars in 2006, of which the US software outsourcing market will account for 65%. If customers from European countries are included, this proportion will rise to more than 80%. English software outsourcing, led by the United States, will continue to occupy the vast majority of the global software outsourcing market. In addition, Japan is expected to account for 10%. On the other hand, the global software outsourcing market is mainly India, Ireland and other countries. India has become the largest software outsourcing country, and 80% of its software industry revenue depends on software outsourcing business. In terms of competition, the US market is still monopolized by India, and the European market is monopolized by Ireland. At the same time, countries such as the Philippines, Brazil, Russia, and Australia have also joined the ranks of global software outsourcing competition.

Recently, a domestic IT analyst wrote an article pointing out that in 2006, software outsourcing will become a hot spot in the market.

It is reported that the China Innovation and R&D Center created by China's software outsourcing company Dazhan Group for the US company Netgear was officially completed in Dazhan Group's Beijing office recently. This is the first time that Netgear has moved part of its development process to China.

According to relevant data, China's software outsourcing to Japan has grown rapidly, with more than 60% of domestic business coming from Japan. On the other hand, for the Japanese market, software outsourcing to China only accounts for 2-3%, and the rest is mainly done domestically, so there is still a lot of room for development for Chinese software outsourcing companies.

"Chinese software outsourcing service companies must change their previous focus on the domestic and Japanese markets. Many companies are targeting the same market, resulting in low profits and fierce competition." Ding Wenwu said, "Software outsourcing companies must achieve differentiated development."

Author: Xue Juanlai

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