#1, #2, #6 and #7 are a fact. However …

#3: The growth in broadband may not have a very high impact on the IT outsourcing business in China. It *might*, but this is not a certainty — and there’s little evidence that this is the case right now. (I know of a couple of instances, but nothing statistically significant.) There’s certainly a hope that burgeoning broadband will create an opportunity, but I see many obstacles on the execution side.

#4: Huh? Northeast and East China, eh? NEVER look at it this way. It’s much more a factor of which cities are players rather than regions. BJ will remain #1. SH and SZ come in next. Then there’s DL, primarily for Japanese clients. Next up: WH, XA, CD. Possibilities: Suzhou, NJ, TJ, GZ.

#5: Maybe. Maybe not. GZ is certainly making a play in conjunction with HK. SZ is already a player. But a claim of “rapid growth” is far from certain — and not as likely as in other places.

#8: And they’re all in DL or SH (some in BJ). A “good number”? What does this mean? This seems like an exaggeration sans DL.

#9 & #10: Wishful thinking … but my wish, too. Little evidence of this. Lots of talk; little action. Microsoft has 100% market share, zero revenues. That’s life in China; get over it …

#11: Make me fall out of my chair laughing. Can’t build packaged applications solutions if you haven’t used the software in the first place!! Ask SAP how many instances they have of R/3 in China. Then ask how many are supply chain apps. Hmmm … I think we have a disconnect.

In BPO for English-speaking countries, China sucks. Anybody who speaks English can get a better job than working at a call center. For Asian languages, BPO in China will lead India. Language issue, plain and simple.

In ITO, for end users … well, don’t bother going there. For ISVs, it really depends. L10N/G18N, sure. Testing, okie, dokie. Open source, embedded, and agile: China is a better option than India. For everything else, get on the next flight to India.

In ESO (engineering services outsourcing), China will kick India’s butt. I know that NASSCOM is claiming superiority for India in ESO, but it simply isn’t so. India does have strong capabilities, but they can’t touch China.

Fact: According to a third-party monitoring service, there are more English-language technical conferences held each year in China than in India.

Fact (and a more important fact): There are over four times as many English-language technical papers published in China versus India. That’s right, over four times as many!!

Take a look at this:

4456 records in Inspec for 2005-2007
((india WN ALL) AND ((({B}) WN DI) OR (({C}) WN DI) OR (({D}) WN DI) OR (({E}) WN DI)) AND ((PRA WN TR) OR (EXP WN TR))) NOT (THR WN TR) {india} WN CO

20503 records in Inspec for 2005-2007
((china WN ALL) AND ((({B}) WN DI) OR (({C}) WN DI) OR (({D}) WN DI) OR (({E}) WN DI)) AND ((PRA WN TR) OR (EXP WN TR)) AND (({English}) WN LA)) NOT (THR WN TR) {china} WN CO

There’s proof for you!!

Regarding IPR issues, I don’t want to lie and say that China is making great progress in IP protection. The problem is somewhat cultural; it transcends anything the government can do.

Solution: Don’t be an idiot!! Keep all core IP development in your home country; don’t offshore it … anywhere!! But if you’re a SME (small/medium enterprise), look to China for R&D for exploring secondary and tertiary market opportunities that are simply too expensive to explore back home. Let’s take the U.S., for example. The annual fully-burdened labor cost for a Ph.D. is about $250,000. In China it’s less than $50,000 (and I’m being generous in my calculations; a Ph.D. for a top-tier school with a few years experience can often be had for as little as US$18,000 per year … and burden rates are much lower in China, especially in areas with good incentives, like Suzhou, TJ, and GZ).

SMEs in the States cannot afford to explore secondary market opportunities. But with a China option, exploring secondary markets becomes doable. Often the best bet is to start as an ODC (offshore development center) and then convert the ODC with a BOT (build-operate-transfer) model to a CRC (captive research center). Flip a switch and you go from third-party outsourcing support to a full-fledged research center in China.