Thursday, June 01, 2006

Infosys and China:

There is a nice blog written by Vinnie Mirchandani on the upcoming Software outsourcing firm and their bussiness model (on high level). There is small discussion in comments section between Vinnie and me.

"......But Chinese firms will evolve very differently from Indian ones. They will borrow capital and aggressively make Western acquisitions. Indian firms in spite of huge valuations are still primarily organic in growth and self-funded till they go IPO (with exceptions like Patni which took capital from GA). China offers its firms a lot better infrastructure than India. The talent, at least for now, is cheaper than in India............"

My coments: (I corrected some spellings here, these are not changing any meanings)
"hmmm... 17% cranes.. its interesting that with 17% of occupancy, what these cranes are doing... (I don’t have any data... but I heard the occupancy rate is very low (it was high in original post)...

Another thing… you write lot of business processes and knowledge based industry... How come you have so much regard about "catching game". 10 years, new boom in other industry.. . Is country is right to invest every time to create this "forced" boom. I am of view, that most of industries moved to China in '70s because of geo-political situation. (Put fingure (was figure) on the political map of 70s and 80s, there were 4 types of countries: US and rich western allies, Dictatorships in third world countries supporting US and west but highly unstable political situation, USSR with its colonies and finally, democracies in third world countries but supporting USSR political ideology, making these countries politically stable but economically unviable. China was a gold mine with political stability and anti-USSR political thinking.
This can be a long discussion... in short, last 30 years can not be taken as base for future jobs migration and wealth creation. It’s anew world with new challenge.
Not easy to be Infosys or Wipro or Tata... New companies should try to focus on new gold mines... Remember gold crazy west, eventually become wild west…"

" Avneesh, thanks for your comments. I said Chinese vendors will start to challenge Indian vendors in a few years not pass them. I also said their path, as they are in distant catch up mode, will be very different that what Indian vendors have used to get as big as they are.

Any discussion of China evokes political reaction. I have written about that elsewhere. China also has language, IP protection issues buyers worry about.

However, India is a victim of its own success. Some bank auditors are already concerned about risk concentartion around IT systems with Indian firms. I have written elsewhere about wage/rate inflation and staff turnover and infrastructure issues in India. You would be naive to think a competitor would not harp on these weaknesses.

The overwheleming advantage is firms like Infosys have done over 20,000 global delivery projects - Chinese firms barely in the hnudreds. That discipline counts for a lot. But the Chinese have shown they can compete in many different markets on price. I can see a market where Indian firms move to the middle band and the Chinese get more of the bottom."

I liked his points and over discussions... you can go read other posts by Vinnie...

Bye for now....

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