Enter the Dragon!

China is a reality in the global IT world today. Days are gone where Chinese companies are a distant competition. Today, many Chinese companies are competing heavily where price of execution is crucial. Many managers are trying out few low risk projects in China. The growth in this region mirror's Growth in India a few years back. While, there are still a lot of challenges for Chinese in terms of language, capabilities and capacity, there are advantages in terms of price, brain power and most importantly hunger to prove.

Here are a few questions and my inferences:

1. What does it mean for the Indian companies and Indian Engineers?
I think the top 10 Indian IT companies are not Indian any more. They have become truly global and their head quarters happen to be in India. I know for a fact that all the big 5 have development centers in India and are consciously moving certain percentage of work to China. Some logical reasons are:
a) To de-risk their business
b) To exploit cheap labor
c) To tap the Chinese market
d) To ride the IT wave
I will add another logical reason here. Access to Large Talent pool. One of my customers I was talking to has this to say "A Chinese engineer today is an un-polished diamond. It depends on your polishing skills, to extract the true value." For Indian companies, China is another job market. For Indian engineers, it is a different situation. To differentiate themselves, they need to work much harder and not satisfied with the low end work. They need to constantly strive towards moving up the value chain.

2. Are Chinese companies a competition? Really?
Chinese companies are definitely a competition if Indian companies are competing on the basis of billing rates. The difference is huge and the IT decision makers are thinking harder and asking the question "Why not China?" or "What type of projects can we do in China?". Microsoft is going further here because of the commitment to Chinese government. "How can I do my projects from China? and how do Lower my risks of project failure" This is an opportunity I think for Indian companies which are truly global.

3. How can China and India work together?

Here are a few lessons

China does not provide cost advantage if you are doing your projects in cities such as Beijing and Shanghai.
China as a market is much bigger than India but to succeed in this market, you have to take help of Chinese companies.
Chinese IT companies are typically good in areas such as localization and Globalization.
China is a good place to execute large scale IT projects.
China is not a good place to execute projects which have high customer interactions such as Support.

Given the above scenario, there are large synergies between India and China and it makes every business sense to exploit these synergies.