Indian firms like Infosys and Wipro have already reshaped the IT Services industry. Now China is focusing on building up its software industry. What are the implications of this for the global software industry? This is a question that dogged many observers. Until now I haven’t seen a thoughtful analysis about this. Yes, there have been a number of opinions expressed based on anecdotal data and armchair speculation. But there is nothing like what the book, China and India: Opportunities and Threats for the Global Software Industry by John, McManus, Li, Mingzhi, Deependra, Moitra offers.
This book provides a good analysis. It first looks at China and India separately using PESTEL analysis. It then compares the two of them together using a SWOT perspective. This sets the stage for a good discussion about their influence in the global software industry. Since China and India aren’t acting independently the authors do a fairly perceptive examination of the interrelationships between the strategies of the two countries. They also look at likely competitive strategy and positioning that China and India are likely to follow in the years to come.
There are some interesting conclusions. India and China will compete only at the edges; both will gain market share in the global software industry. Also, India IT Services domination will not be seriously threatened by China. This is because the Indian IT Services firms have attained critical mass and scale in contrast to the Chinese firms. The Chinese industry is remains fragmented and is unlikely to see significant consolidation in the near future. And unless consolidation happens, as fast follower strategy is unlikely to work. The area that Chinese firms might shine is not IT Services but products. They have the advantage of a larger local market and better government support over the Indian firms.
I think the issue of India and China will have to be revisited a few years from now. The strength of this book is that it provides an analysis framework that can be reused.
The book is priced at $110. To me this is a bit bizarre. This price point effectively ensures a small readership which is quite a shame considering that topic is so relevant to a large part of the software industry.
Business week is carrying an article dated today which may be relevant here -
The Tech Dragon Stumbles
http://www.businessweek.com/globalbiz/content/may2007/gb20070503_570368.htm?chan=globalbiz_asia index page_top stories
An interesting point to note there is
The woes of China’s tech hopefuls, though, aren’t entirely the result of poor timing or management missteps. What was supposed to be a major advantage for Chinese tech companies–the backing they receive from Beijing–has in many cases turned into a liability. In exchange for preferential loans, tax breaks, and sweetheart property deals, Communist Party bosses often get to influence key business decisions.
“Every [local] government wants to go into high tech,” says Pranab Kumar Samar, an analyst in Hong Kong with Daiwa Institute of Research. That might make for good politics, but it’s not exactly smart business.
Manju
S7 Software
s7solutions.com
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