Cost Effective Solution: Outsourcing

Outsourcing is done to save money, improve quality, or free company resources for other activities. Outsourcing was first done in the data-processing industry and has spread to areas, including call centers. Outsourcing is the wave of the future. The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of worldwide labor, capital, technology and resources. Call centers are considered as one of the most common outsourced task for companies. In fact, it is also regarded as the first tasks to be outsourced. Peter Ryan, an analyst for Data monitor explained this statement saying that:

"The call center industry is now looking to adopt more third-party customer care services than ever before. This means that their horizontal functions will be shifting to more profitable requirements. Additionally, the need to satisfy demand from multiple contact channels as opposed to strictly voice-based services will be crucial for success over the long term.

Benefits of Outsourcing: -

Outsourcing is successful in increasing product quality and substantially lowering firm and consumer costs. Because outsourcing allows for lower costs, even if quality reduces slightly or not at all, productivity increases, which benefits the economy in aggregate. Outsourcing can also present compensation to less developed, typically non-Western states.

Some benefits of outsourcing are given below: -

1. A good outsourcing firm has the resources to start a project right away. Handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support they need.

2. Outsourcing is control capital costs. Cost cutting may not be the only reason to outsource, but it's certainly a major factor. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business.

3. Outsourcing always increases efficiency. Companies that do everything themselves have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers. An outside provider's cost structure and economy of scale can give your firm an important competitive advantage.

4. Outsourcing is reducing labor costs. Hiring and training staff for short-term or peripheral projects can be very expensive, and temporary employees don't always live up to your expectations. Outsourcing lets you focus your human resources where you need them most.

5. Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions, and technologies all change very quickly. Outsourcing providers assume and manage this risk for you, and they generally are much better at deciding how to avoid risk in their areas of expertise.

6. Outsourcing can help small firms act "big" by giving them access to the same economies of scale, efficiency, and expertise that large companies enjoy.

7. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer, and it can help managers set their priorities more clearly.

Outsourcing Relationships: -

The relationship is based on skill sets held in both the outsourcing company and the company that is doing the work. To have a successful outsourcing experience then the skill set between both companies should be similar, and the trust relationship should be acknowledged. As well, there are social and political reputation issues on both sides of the contract that should be managed as well to ensure that the outsourcing process is successful for both companies.

If there is a good understanding and strong working relationship between the key management personnel of both teams, then such relationships often tends to last long.
Also maintaining one point of contact will avoid confusions. Companies can keep one project manager per project or per client.
Well-defined performance criteria have quantifiable objectives, service quantities, quality, and customer satisfaction and are measurable against other providers.
Successful outsourcing relationships involve setting up of special executive committees or boards that draw out the best strategies for smooth & effective handling of outsourcing relationship.
For a successful outsourcing relationship, it is better to have frequent formal review meetings. These meetings can discuss what both teams are working towards and a high level view of the future goals and objectives. Product reviews and deliverables can be discussed at such meetings.

That's what I mean by when recommendations are followed, the outsourcing company and the company that is doing the work will each increase within few months, which represent a statistically significant.

More Satisfaction: Outsourcing or Offshoring?

ffshoring provides more satisfaction than outsourcing even though the former is used lesser, says a recent study by Bain & Company. Only 37% of respondents to the survey use offshoring while the percentage of outsourcing practitioners is 70% (almost double). At the same time, the satisfaction level from outsourcing is 3.68 points and the satisfaction level from offshoring stands at 3.70 points. (See Chart).

Region-wise calculation shows that while Europeans (42%) don't offshore as much as North Americans (51%), they are relatively more satisfied. The satisfaction level in the U.S. stands at 3.75 points while it is 3.88 points in the case of Europe.

This year the survey includes 1,221 responses from more than 70 countries. The study focuses on 25 most popular management trends and tools, including Six Sigma, outsourcing, offshoring, benchmarking, collaborative innovation, core competencies, customer relationship management, growth strategy tools, strategic planning and knowledge management.

In terms of usage, of these 25 management tools, offshoring ranks 22nd. And in terms of satisfaction, it stands at 16th position — this is nine ranks down from 2004.

Brewing Up IT Success: Outsource Your Network Globally

By Beth Ellyn Rosenthal, Editor

In 15 years, InBev, a Belgian beer manufacturer, went from No. 17 to the leading brewer in the world. After reaching the pinnacle, it wanted to stay there. "It's easy to become the biggest. We wanted to become the best. We'd been doing things the same way for 50 years. So, we needed to examine if this was still the right way. If not, we had to find out how we could achieve world-class efficiency," says Michael Teulings, IT/IS Global Contract and Quality Director.

In other words, InBev was searching for the IT equivalent of the best yeast to ferment its hops and barley in order to brew high-quality beer.

So InBev, which brews four global brands--Stella Artois, Beck's, Leffe, and Brahma, plus more than 200 local brands--hired a consultant to study its global IT infrastructure. During a nine-month study, a small core team built an internal and external case, then compared the two. "The team found that InBev could change a lot," reports Teulings. "We are not an IT company but a brewer. We felt we could best assist InBev on its journey from biggest to best by considering outsourcing."

In 2004 InBev sent out a Request for Proposal asking outsourcing suppliers to devise improvements to its network based on six categories:

• Capabilities
• Cost
• Leverage
• Operations
• Risk
• Speed

Ten companies responded, which InBev short-listed to four. It selected BT, but told the second choice candidate that is was put on ice. It wanted to outsource to them if the negotiations with BT failed.

Why did InBev select BT? "We had to have a global player that had a matching business strategy," explains Teulings. One component of that strategy was opening new markets. "We asked them, 'What about China? What can we do in Russia?'" he recalls.

InBev signed an outsourcing agreement with BT to manage its network in July 2005. That includes the brewer's wide area network, local area network, PBX management, video and audio conferences, fixed voice and mobile management, and telephone expense management.

Working in Multisourcing

InBev awarded the infrastructure management piece to a global Tier-1 provider and some application support to an application service provider. "Documenting your operational processes and aligning them with all parties is the way you let strong players to work together," Teulings says.

"InBev was very sensible in going about this. They regulated how we would work together. Everyone was clear about the linkages between the towers," says Colin Spence, COO, BT Americas. He says BT is "relaxed" about working with other outsourcers since its sweet spot is the network not the entire IT infrastructure.

BT set up a network operating services center in Brasil to do InBev's work. "We spread the work so we can get as close to the customer as possible," says Spence.

The service-level agreements are business oriented. "We're worried about them being able to transmit files around the globe, for example," says Spence.

How Outsourcing Helped the Brewer Meet its Business Goals

Teulings says outsourcing has popped open a number of financial benefits. While declining to mention numbers, he says the cost savings have been "significant." BT included a gain-sharing arrangement on the mobile phone segment, which has produced some heavy gains for both sides. The result: net profit in 2006 was up a stout 56 percent; IT contributed its fair share in the company result.

BT has a worldwide network of relationships and suppliers "which has gotten us better and more competitive pricing," Teulings reports. These relationships have also allowed InBev to reduce the number of vendor contracts it has to manage. "This has reduced our complexity," he continues.

BT has local resources in 53 countries and legal entities in more than that. That allows BT to handle all tax and regulatory issues and deal with export/import issues as well.

InBev has been able to support the business in developing markets with BT's help. For instance, InBev expanded into the Russian market since outsourcing. "We asked BT to help us cover 11 time zones in Russia," says Teulings.

BT did so well in the rest of the world, that InBev penned an amendment and added China to the contract. The brewer has 17 plants in China, which also represents a large growing market for its beer. "This is a new market for both of us. It's a challenge because there are so many regulations," reports Michael Teulings. Together the partners are finding their way.

BT's internal 411 has allowed InBev to analyze the consumer-goods market with greater accuracy.

The brewer has been able to look at utilizing newer technologies like VoIP (Voice over Internet Protocol) that BT offers, something it probably couldn't afford to do on its own with the same speed and scope.

Why the Relationship is a Success

"We are tough when required and always honest and fair," says Teulings. Talking a lot (sometimes over beers) helps a lot. "You need to listen and understand what the other one is saying. And it helps that we are clear."

Teulings says at the outset he clearly explained InBev's emphasis on financial discipline. He also outlined the company's procurement strategies.

They try to handle disputes at the lowest level possible. If that doesn't work, it's up to the zone managers to correct the problem. Problems should rarely get to Teulings's level.

"We always have factual discussions. Our rule is: try to understand the other's point of view," he continues. When he disagrees with BT's assessment, he likes to say, "Show me the data!"

The InBev executive says both parties have tried to build relationships up and down the chain of command. That includes the leaders of the account in each country as well as the managers of each zone.

Teulings says he trusts his BT counterparts. "I don't feel I always have to challenge all details, but I can work in an open relationship where we can challenge each other if we feel that it's appropriate." he says.

I'll drink to that!

China Leaps Forward In Advanced Tech Education

BY SHEILA RILEY

FOR INVESTOR'S BUSINESS DAILY

Posted 5/1/2007

As policymakers grow increasingly alarmed over the threat outsourced research and development poses to U.S. engineering competitiveness, a new study shows China leading in graduate degree-level engineers capable of advanced research and development.

In a recent Duke University study, researchers said China is overtaking the U.S. and India in advanced engineering and technology graduates.

India produced only about 1,000 engineering Ph.D.s in 2005, not even enough to staff its own universities. The U.S. graduated 7,333, while China came in first place at 9,427.

Even taking into account population differences — China has four times as many people as the U.S., while has India three times as many — the numbers are significant.

"The outsourcing of engineering jobs will continue and gain momentum, and what will go next is research and design," said Vivek Wadhwa, an executive in residence at Duke and the study's lead author.

The report, "Where the Engineers Are," appeared in the National Academy of Science Issues Magazine in March.

The study also concluded that, contrary to popular belief, the U.S. does not face a shortage of engineers.

Previous Duke research contradicted the prevailing thought that India and China graduate many times more baccalaureate-level qualified engineers than the U.S.

Still, the latest findings are renewing worries that the U.S. is falling behind.

More than 60 percent of U.S. engineering doctorates were awarded to foreign nationals, according to data from the American Society for Engineering Education.

The U.S. is producing the same number of Ph.D.s for its citizens as it did in the 1970s — about 3,000 a year, says Michael Gibbons, ASEE Director of Data Research.

According to the report, the engineering doctorate rates for India and the U.S. showed little change from 1995 to 2005.

But China made a huge jump, increasing from under 2,000 Ph.D.s in 1995 to over 9,400 over the same period.

The study's authors say the U.S. needs to adjust its focus to address the looming shift in the international tech hierarchy.

"We worry about the wrong things," Wadhwa said. Those wrong things include outsourcing of lower-level tech jobs such as computer code development, which can be done anywhere.

It's the migration overseas of critical R&D, the kind that requires advanced degrees, that should be a cause for concern, Wadhwa says.

"The next wave of outsourcing is what we have to worry about," Wadhwa said.

Student perceptions of what makes a good career are part of the problem, Wadhwa says. Rather than studying to be scientists and engineers, young students are opting for seemingly more lucrative careers such as investment bankers.

The field of engineering suffers from misconceptions, says Richard Heckel, founder of Engineering Trends, an e-commerce consulting firm.

Murky job data often leads high school seniors to conclude that engineering jobs won't be in demand by the time they're ready to work. Offshoring and lagging salaries contribute to the problem, according to Heckel.

Better media coverage would help, he says.

"The media actually play a significant role in all this," Heckel said. "Engineering achievements are not getting much press."

Duke's report, part of an ongoing look at globalization and engineering, holds good and bad news for the U.S. economy, says Robert Litan, research and policy vice-president at the Kansas City, Mo.-based Kauffman Foundation, which works to advance entrepreneurship.

"The good news is that there's a lot of hype in the India and China engineering numbers," Litan said. "The bad news is that if you look at the masters' and Ph.D.s in China and India, they are rapidly increasing."

Engineering competitiveness is intertwined with immigration issues.

The Duke study focused on highly skilled immigrants or immigrants who want to be highly skilled, Litan notes.

Those immigrants come to the U.S. mainly on temporary visas. That needs to change, he says.

"The best way to keep the research from going offshore is to bring the smart people here," Litan said.

He adds that research shifting overseas isn't all bad.

Though many would prefer research and development to take place on U.S. soil, he says, everyone benefits from R&D successes, wherever it occurs.

"The world is not a zero-sum game," Litan said.

IDC Highlights the Strengths of the Russian Software Development Outsourcing Industry

Twenty Companies Share Experience, Best Practices for Engagement

[USPRwire, Wed May 02 2007] The Russian Software Developers Association (RUSSOFT) today announced the results of a study which focuses on Russia as a location for offshore software development. The study, produced by IDC and sponsored by Russoft, bases its findings on interviews with U.S. and European firms that have outsourced development of software applications to Russian companies. Results and recommendations are summarized in a white paper available for download at http://www.russoft.org/downloads/IDC_research.pdf.

The research finds that stability of the relationship, technical expertise, and relatively low staff turnover are key advantages of Russian software development companies. Though price is often behind the initial supplier choice, these factors influence strongly the quality of service and strength of the relationship that customers value in their dealings with Russian outsourcing providers. Participating companies pointed to the availability of very well educated engineers, strong technical skills, and sound methodologies. Softer factors often mentioned included a closer cultural fit with the U.S. and Europe than Asian suppliers, similar work ethics, a clearer understanding of business issues, and similar time zones.

“American and Western European companies perceive Russian companies as a source of sophisticated technical expertise, which is absolutely necessary for approaching complicated technological tasks. We are also much closer culturally to Europe and the US than popular outsourcing locations in Asia, which makes Russia an attractive destination to base sourcing operations. We believe Russia should be a key technological component in any multi-sourcing strategy,” said ¬¬¬¬Valentin Makarov, President of RUSSOFT. “One of the common misperceptions in outsourcing is that having more people on a project is better. In reality, having the right people is more important and will actually reduce project time and costs.”

“Several factors work as Russia’s differentiators on the world market, such as the large pool of highly skilled professionals with mathematics and science backgrounds, capable of solving complex and math-intensive problems, and the ability of Russian companies to manage high-end, complex projects,” said Vladimir Kroa, Regional Director for IT Services Research, IDC Research. “Also, Western European and American organizations often perceive Russia as being a closer cultural fit than countries like India, China, or the Philippines.”

IDC anchored the research by conducting in-depth interviews with senior management from 20 U.S. and Western European companies in the IT (hardware, software, and services) and telecoms sector. Each of the 20 companies had nearshore / offshore experience with Russian suppliers for application development, from specific tasks to full R&D processes, including design, testing, and continuous maintenance. Company revenues ranged from $10 million to $100 billion, with offices spanning one country to near 100.

The results of the research are contained in a white paper available for download by clicking here http://www.russoft.org/downloads/IDC_research.pdf. For more information about nearshore / offshore outsourcing options to Central and Eastern Europe, visit RUSSOFT’s website, www.russoft.org.

# # #

About RUSSOFT
The Russian Software Developers Association (RUSSOFT) is the nationwide association for software development companies from Russia, Belarus and Ukraine. RUSSOFT unites more than 80 companies with 17,000-plus highly qualified programmers and software engineers with advanced graduate level degrees in Technology & Computer Science. www.russoft.org


For more information, please contact:
Cheryl Gale / Eric Seymour, March PR
russoft@marchpr.com
+1 617 475 1571 / +1 617 475 1564

Philipp Agapov, Russoft
philipp.agapov@russoft.org
+7 (495) 940-6569

RACINE, Wis.,– SC Johnson China has been named a Best Employer in China, by Hewitt Associates. SC Johnson China ranked third on this year’s list.

RACINE, Wis.,– SC Johnson China has been named a Best Employer in China, by Hewitt Associates. SC Johnson China ranked third on this year’s list.

“Congratulations to the people of SC Johnson China for this wonderful achievement,” said Steven Stanbrook, President – Developing Markets. “This award speaks to our commitment to developing and maintaining great workplaces in all our offices and plants around the world.”

In the Best Employer study, Hewitt identified several characteristics that all Best Employers share, including effective and committed leadership, a high-performance workforce, strategic HR functions, and a commitment to addressing customer needs as a way of building a sustainable business.

“To be selected from among so many great companies as the third best employer in China is truly an honor,” said Darwin Lewis, Vice President and Group General Manager – Greater China. “My thanks go to everyone at SCJ China who works to maintain a work environment that provides the best place for the best people.”

SC Johnson has been named a best employer or great place to work in more than 10 countries around the world. Only ten companies were named to this list, including FedEx, Accenture and the Four Seasons Hotel in Shanghai. In selecting the ten best companies, opinions were collected from almost 34,000 employees from more than 150 companies. Hewitt Associates, which developed the list, is a provider of human resources consulting and outsourcing services.

What's the Weak Point of China's Current IT Outsourcing?

BEIJING, May 2 /Xinhua-PRNewswire/ -- The information technology outsourcing (ITO) industry in China is still in a starting stage. But, it has already shown a strong growth momentum. Software outsourcing has been the most outstanding aspect. CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong, recently released the 2006-2007 Annual Report on China's Software Outsourcing Services Market, which shows that in 2006 China's software outsourcing market reached a size of $1.43 billion, up by 31.56% over $920 million in 2005.

China still lacks experiences in IT outsourcing when compared to other countries. There is a need in research efforts in summarizing IT outsourcing theories and models that suit enterprises and the actual situation in China. However, as Chinese enterprises further deepen their IT applications, there is no doubt that the IT outsourcing industry has a bright future. Some have predicted that China will be among the world's top 3 countries in terms of IT outsourcing businesses between 2007 and 2010. It is already 2007 now. Has China really been among the World's top 3 countries in terms of ITO? What problems still need to be urgently solved on the road towards the goal? CCID Consulting will make the following analysis:

Direction of development remains unclear

Currently, many experts and scholars are talking about which model China should follow to develop ITO. CCID Consulting argues that any development road, be it the India model or other models, needs to depend on the actuation of a country. There is no contradiction between inherent experiences and innovations. China should decide the road that it is to take based on its national conditions. ITO is still in a starting stage in China. It is not mature yet. The country must start with ''doing processing work'' for others and can only become independent and then gradually establish its own brand after reaching a certain scale of and experiences in technology, personnel and management. Before establishing its independent brand, China must be the ''processing'' for others. Through outsourcing, enterprises can grow and become stronger in a short period of time, improve their international competitiveness and form their own brands faster.

Shortage in talent reserves

In pace with the fast growth of ITO, there is also a growing talent demand from enterprises. However, this is such a situation: On one hand, there are large numbers of university graduates who cannot find jobs each year. On the other hand, enterprises cannot find suitable persons to fill in their position vacancies. Some enterprises even say that if there is sufficient human resources support, there will be no problems for us to get orders. What is the reason behind this? Firstly, there is more examination-oriented education rather than qualification education in China. One-sided pursuit of enrollment quotas has made our students lack a spirit of innovations. Secondly, theory is separated from practice. We are too conventional in setting up university majors and lack a link with practice . The students which we train are sole bookworms and cannot quickly adapt to the work needs. In addition, students also have problems in their employment mentality. While there is anything wrong for students to look for enterprises with strength when they seek employment, many students have grandiose aims but puny abilities. Enterprises have to pay a very high training cost even if they want to recruit such students. This will increase corporate burdens. Finally, there is shortage of compound talents. Compare with people with monolithic skills, compound talents can save manpower cost for enterprises and more suit the requirements of work posts. This can shorten the talent training cycle and give full play to the strength of talents. This is why enterprises generally scramble for compound talents and practical talents. But at present, there are relatively few compound talents. This has made it entirely impossible for enterprises to build up their human resources reserves.

Lack of industry organizations that represent enterprises

When talking about technology outsourcing, many people are willing to compare China with India. Other aspects aside, India does have advantages in industry organization which China cannot rival. In India, there is an industry association called NASSCOM. This is a non-profit association registered in the form of company. It is no exaggeration to say that India's outsourcing success is attributable to this organization to a certain extent. It functions like the market department of a company. What is different is that it is the international ''market department'' of India's outsourcing industry. When a US company needs business outsourcing, its first reaction is to turn to India, because NASSCOM has done its work to the best. For China to be among the world's top 3 countries for technology outsourcing, it is very important to set up a non-profit organization that can represent the industry to take part in international competitions.

Lack of experiences in large-scale team management

In China, a development team of over 100 persons will be considered a very big team. For India, big teams are often defined for 1,000 or even several thousand persons. Technology outsourcing enterprises in China need to find projects and solve the problem of personnel management. How to distribute a large project level by level and how to achieve seamless connection between employees and project teams and minimize management cost are the problems that a technology outsourcing company needs to solve.

Lack of ability to provide solutions to big international enterprises

Through surveys, experts at CCID Consulting think that no relationship of frontal conflict has been formed between China and India in technology outsourcing. It can be seen from the projects, which China has undertaken, our services are still at the rather low end of the industry, such as software development and testing. China has almost not involved in high-end services such as solution provision. This is mainly because the country does not possess too big strength in the fields ranging from consulting to design.

To sum up, there is still a long way for China to go to be among the world's top 3 countries in terms of IT outsourcing services between 2007 and 2010. There are also many problems for China to solve. But, there is one aspect which is certain: China must clearly understand its strengths and characteristics, find a road which suits its national situation and take it in a down-to-earth and persistent way. It is not just the responsibility for some enterprises to gain a place for China in the international technology outsourcing market. But, enterprises alone are not enough. The government should also offer corresponding manpower, materials and policy support.

About CCID Consulting

CCID Consulting Co., Ltd. (also known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is a direct affiliate of the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen and Harbin, with over 300 professional consultants and industry experts. The Company's business scope has covered over 200 large- and medium-sized cities in China. Apart from home market development, CCID Consulting is establishing international cooperation links across the United States, the Asia-Pacific region and Europe, by setting up agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.

Based on four major competitive areas of the powerful data channels, industrial resources, intense knowledge and deep understanding of information technology, CCID Consulting provides customers with consulting, research and IT outsourcing services covering strategy planning, IT application, marketing strategy, human resources and information technology outsourcing. Our customers range from industrial users in IT, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks.

CCID Consulting is committed to becoming the No. 1 brand for strategy consulting, the No. 1 consultant for enterprise management and the No. 1 expert in market research. For more information, please visit our website at http://en.ccidconsulting.com/ .

For more information, please contact: Grace Gao CCID Consulting Co., Ltd. Tel: +86-10-8855-9020 Email: gaojie@ccidconsulting.com

CCID Consulting Co., Ltd.

CONTACT: Grace Gao of CCID Consulting Co., Ltd., +86-10-8855-9020, or
gaojie@ccidconsulting.com

Web Site: http://en.ccidconsulting.com/

Talk of India, China dominates Wharton summit

Panelists suggest countries crucial to global business

By G. Venkat Ganeshan

PHILADELPHIA — India and China were the main topics of interest at The Wharton Economic Summit held last month by the University of Pennsylvania's The Wharton School in Philadelphia.

Several panelists across all sessions highlighted the underlying importance of the two Asian nations and the value they hold for companies to do business. Senior economists and top-level managers stressed the need for companies to look at China and India and their booming potential.

Their message was succinct — multinationals cannot encompass the concept of globalization without having set foot either in India or China.

In a lunch session, Wharton professor of finance Jeremy Siegel took this a step further in discussing some of his findings from closely monitoring China and India. According to his research, China and India will jump to the first and third positions, respectively, in terms of consumption of goods by 2050. The United States will be sandwiched between the two and he pointed out that companies should not view this Asian explosion as a threat, but should consider it an opportunity to target a population of almost 2 billion and the vast potential it holds.

Following Siegel's thoughts, panel sessions focusing on outsourcing and emerging markets drew some of the largest crowds of the summit.

In the session on emerging markets, Manuel Montero, the chief executive officer of SAFTPAY, a non-credit card company that offers a payment system allowing bank customers worldwide to make e-commerce transactions, said that 86 percent of the world population is part of emerging markets.

"Even though 86 percent of the world population comes from these emerging markets, they constitute only 23 percent of the world economies," Montero said. "So, it's very difficult to find the perfect partner country. You have to select the country and have to understand the culture and how the country functions. You have to make sure that you have a commitment and also a strong, close and continuous management."

Montero focused predominantly on the Latin American markets while Rohit Aggerwal, co-founder and managing director of RAS Capital Management, focused on India.

He laid out several favorable facts that would entice potential entrepreneurs to do business in India. A 13-year veteran of handling foreign investments in India, he said that the greatest asset of India was its human capital.

"The greatest asset that has India going is its population," Aggerwal said. "Fifty percent of the population is under 25 and that represents a large, potential workforce entering employment."

He attributed India's sudden spurt of growth to a favorable economic climate in the last 10 years.

"Between 1998 and 2007, cable subscribers have gone from 25 million to 85 million," Aggerwal said. "Cell phone users have gone from a million to 120 million. There has been a huge explosion in consumer service.

"The interest rate has come down from 40 percent to 10 percent," he said. "Inflation has fairly come under control. There is a strong flow of foreign investment and that has resulted in an increase in mergers and acquisitions."

Finally, Shiv Khemka, vice chairman of the Sun Group, summed it up when talking about choosing the perfect partner to do business with in emerging markets.

"You have to choose the right partner," Khemka, who spoke about the benefits of Russia, said. "Get the best human capital and have a long-term view in these emerging markets. These are the keys to succeed in these regions."

Rajat Gupta, senior partner at McKinsey & Co., was the keynote speaker of The Wharton Economic Summit. Panels throughout the two-day summit, held on April 12 and April 13 at the Pennsylvania Convention Center, covered a number of business topics, including the future of technology, "Wall Street meets Hollywood," sports business, real estate and security.

The summit also featured a focus on ethical issues confounding business organizations and on equity markets.

Gartner says companies must have a ³Chindia² strategy

03 May 2007
Gartner, Inc

To stay competitive in the global economy, it¹s imperative that IT organisations implement a ³Chindia² strategy, according to Gartner. Gartner analysts examine how China and India are altering the future of technology and innovation in the newly released book, IT and The East, published by Harvard Business School Press.

³Today China and India are producing some of the world¹s best-trained computer science and electrical engineering graduates,² said Jamie Popkin, group vice president at Gartner and co-author of IT and The East. ³Far from being simply a source of cheap labour, both countries soon will be able to compete favourably for global business as India¹s IT services firms have done not on price, but on competence and capability.²

³The bilateral economy of China and India is in its infancy, but new momentum suggests a powerful relationship is building,² said Partha Iyengar, vice president and distinguished analyst at Gartner and co-author of IT and the East. ³China-India ŒChindia¹ enterprises will have access to complementary skills and resources and, in turn, will have the potential to lead many global markets.

China¹s IT Landscape

By 2008, Gartner says it is highly likely that China will generate intellectual property at a rate comparable to developed countries and, in the same year, actually surpass the United States as the population with the largest English language capacity (in terms of English language comprehension and proficiency, however, China will remain a challenger, not the global leader).

By 2010, Gartner anticipates that at least eight Chinese IT brands will be recognised internationally. The world will witness the birth of a real IT superpower if government restrictions are loosened and the Chinese instinctive talent for entrepreneurialism continues to be encouraged.

³Whether China emerges as a global leader in science and technology innovation relevant to the information and communications technology (ICT) industry is a pivotal issue for you as a business strategist or IT decision maker in a Western corporation,² Popkin said. ³The outcome will influence which global suppliers can establish a strong presence in China for the long haul and which of China¹s strongest domestic companies can compete in international markets.²

India¹s IT Landscape

Anyone doubting India¹s capacity to impact the future of technology need only consider the source of its IT industry. In 1995-1996, India¹s exports of IT services were worth around $1 million. In 2004, they were worth $13 billion. In 2000, India¹s share of business process outsourcing (BPO) was worth $148 million. In 2004 it was worth $3.5 billion. ³This kind of growth rate points to disruptive, challenging forces that can unseat rivals and destroy business plans,² Iyengar said.

With its challenging logistics, stifling bureaucracy, official corruption, and leftist political influences, Gartner hears its clients questioning whether India is worth the effort. These questions often come from CIOs, business strategists, and decision makers who doubt whether the benefits of an Indian connection can truly outweigh obvious risks and discomforts. The vast majority of the global Fortune 1,000 companies have agreed India is worth the effort.

³We also think India is worth the effort when the problems you are facing and opportunities you are chasing match what India can provide,² Iyengar said. ³We estimate that the largest IT services providers will add between 15,000 to 30,000 employees annually, on average, for the next several years in anticipation of continued rapid growth in global demand.²

Emergence of ³Chindia²

New joint ventures between Indian IT service firms and their Chinese counterparts are early illustrations of how a formidable Chindia economy could develop. Indian firms bring to the table world-class software expertise and leadership in global markets. Chinese partners have legions of capable, low-cost employees and greater know-how with clients in Japan, Korea and other Asian countries where English is less prevalent.

China and India hardly qualify today as trading partners by conventional standards for industrialised economies. Total bilateral trade amounted to $18.7 billion in 2005 ‹ more than twice the 2003 level. This is only a small fraction of each country's foreign trade. China's foreign trade in 2005 was $1.4 trillion, rising 23 percent from 2004. India's foreign trade in the 2005-2006 fiscal year amounted to $241 billion, up 28 percent. Yet the annual growth rate of internal ³Chindia² trade is outpacing those high-stepping totals, at an estimated 30 percent to 40 percent.

³As China and India increasingly redefine the future of technology and innovation, knowing how to map a course into that future will be a core competency,² Iyengar said.