India and China in Software

The New York Times has an interview with Dale Fuller, president and chief executive of Borland Software, about the relative strengths of the two countries:

Q. Is India still the country where Western companies look when they outsource technology work?

A. It is clear today that India has the leadership, in terms of market share, for software development and outsourcing. The reason for that is that they had an early jump start. They began by being more Westernized and having more English speakers. A lot of guys who came over here from their institutes of technology and got trained here have now gone back. A lot of the start-ups during the Internet bubble were Indian, and a lot of the resources here in Silicon Valley were the holders of H-1B visas, who also transferred back after the bubble burst.

Q. But the Chinese are catching up?

A. Over the past couple of years, we’ve seen China really put the pressure on by bringing their skills sets up. They have the language barrier. But their president made the statement that everyone will be speaking English within 20 years. They’re making some really big strides.

Q. Is it a question of costs, or do Chinese workers have some skills that are in particular demand?

A. China is a little bit lower-cost than India. But I don’t think that will last for long. Both countries have what we would classify, over the next 10 to 20 years, as inexhaustible sources of human capital.

Q. Are both countries basically in the business of writing code, or of something more sophisticated than that?

A. Between the two cultures, there are some distinct differences. One is that we see more and more services going into India, the complete service, everything from consulting services to a full customer center where you have your phone systems set up with people answering them. It’s all tied together. Having been established for a while, the Indians have a methodology and a process that’s very familiar to those of us in the Western world. China hasn’t really used that and is just now beginning to adopt it.

Q. Does China’s very different political system help it compete against India?

A. China does have a lot more resources subsidized by the government. For example, it is doing something unique to accelerate its ability to compete against India. They are publishing a list of the authorized software that any Chinese-sponsored agency or company that is subsidized can buy. If you want to do business in China, you have to have a development arm in China to build your applications or your software. China is using their muscle to say, “Hey, Mr. Microsoft, or Hey, Mr. Borland, if you want to sell to our companies or our government, you have to be based here.” That will accelerate China’s growth.

Q. Does China have any other advantages?

A. India has processes and methodology from the 90’s. It’s old. China gets to look at all the mistakes of the Indian outsourcers and learn from them. And China gets to use the new technology that we and others have developed over the past year, but India is handicapped. China did the exact same thing with wireless technology. They were so far behind that they said: “We’re not going to lay copper lines all over China. We’re going to go wireless.”

So they are closing the gap. They will catch up. They are three to five years away.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.