The Two-Headed 'Monster'?

Well, Nation, you figured it had to happen at some point, but there's a strong possibility you'll see two powerhouses in the outsourcing business teaming up in the not too distant future -- and when they do, I believe you'll see even the most stubborn outsourcing naysayers, those who cringe at the words "free market," finally coming around to accept the concept of a borderless enterprise.I'm not talking about two companies here, I'm talking about something far bigger. That is, the countries of India and China. In the April issue of Optimize, which we titled "The Globalization Trap," we talk about the growing "Chindia Syndrome," in which the authors, Jamie Popkin and Partha Iyengar, talk about the impact of the two countries working together to build a more powerful source for IT output. In the article, the authors claim:

The bilateral economy of China and India is in its infancy. Yet the momentum we see suggests a powerful relationship that will keep building in the next five years. Access to complementary skills and resources will make it possible for Chindian enterprises to lead many global markets.

I witnessed this firsthand today when I was visited by the executive team of an interesting company from Beijing called BeyondSoft. Many of you have likely heard of the company or are even customers. Their CEO, Ben Wang, spent a good part of our conversation talking about the possibilities of China and India leveraging their strengths to help each other become even more competitive in the global IT market. For instance, the differential between Chinese labor and Indian labor is now such that India can't supply enough lower-level candidates for the IT workforce (consider that, Lou Dobbs!) Enter China, which produces up to 200,000 such workers every year, according to Wang. Indian companies, in this concept, would supply Chinese companies with more experienced, higher level managers, and China would supply the worker bees and cultural expertise (including language services) for other parts of Asia, and the two would compete with the emerging outsourcing suppliers in Eastern Europe and the Far East for business coming out of the U.S. and Europe. By the way, I'll be posting a podcast of my conversation with Wang and other executives from BeyondSoft soon.

Wang says BeyondSoft is already talking to Indian companies (in fact, Wang himself accompanied author Popkin on his trip to India to research the Optimize article) to develop partnerships for building its IT services offerings.

In the Optimize article, the authors say that U.S. companies and CIOs would be ignoring this growing trend at their peril. As they stated:

China's potential power will affect every major corporation in the world, whether or not it's directly engaged with China's economy. Simultaneously, China will transform the IT industry in ways that executives and managers in the West simply must address. This is especially true for companies in financial services, retail, and other supply-chain-intensive industries that embrace advancing IT for strategic and operational advantages.

It's that phrase "whether or not it's directly engaged with China's economy" that CIOs should note. If you've held off on considering global sourcing, or if you're only engaged in it to a small degree, it's people like Ben Wang and companies like BeyondSoft that should have you thinking otherwise. I'm not advocating that you go out and become a customer, but I am saying that if you felt you could ignore India's impact on IT, or pooh-poohed China as nothing more than an emerging market, consider what the two countries together could do. Surely there are possible threats to U.S. companies, but the opportunities -- in IT labor, access to markets, and global presence -- far outweigh them.