2007's Landmark Events and What They Auger for 2008

What a year! Wipro set up shop in the United States. This year's subprime mortgage mess will actually help outsourcing next year. And non-traditional suppliers won some big outsourcing deals. Here's what it all means and a guess at how these events might impact the industry in the next 12 months.

1. The Indian pure-play suppliers solidified their place in the global marketplace.

David Poole, Vice President and Deputy Chief Executive of Global Business Process for Capgemini, says this year they signed a number of large infrastructure deals "that are the bread and butter of the traditional players. We watched as they tried to mitigate the slaughter."

Martin Cook, GSO, Outsourcing, Capgemini, agrees that the Indian suppliers "have changed the face of the market." But he predicts they may face difficulties in 2008. One relates to growth. "As they get bigger, they have to have bigger contracts," he explains. And they will have to change their market position; "once you compete on price, how to you create value?" Cook asks. He says the only way to do that is to grow. "They will have to make some dramatic moves over the course of the coming year," he says. 2009 might even be the year the industry hears a profits warning from an Indian Tier-1, he posits.

2. Software-as-a-Service (SaaS) will continue to gain traction.

Cook says this year's growing acceptance "is the first step in a long march." Capgemini, for example, is working with Google on the enterprise level of Google applications; it's providing wraparound services to handle things like migration, integration, and the authority to use the software. Cook points out Capgemini has also developed a SaaS solution using SAP for one of its key markets, utilities. "We are betting there is an advantage in embracing it first," says Cook.

Poole, the head of NA BPO, says ITO buyers "don't want to pay as much as they have in the past for software services." And they are tired of paying to make improvements in their ERP systems, he adds. Today, "buyers want their applications overnight, even in HRO and FAO," he says.

Poole says next year buyers will grow "increasingly tired" of managing the application infrastructure that supports specific business processes. He predicts BPO suppliers will partner with or purchase SaaS companies to service this emerging requirement.

3. Wipro expands its global footprint in the United States.

First, it bought Infocrossing. This contributes to the continuing trend of four to five mega players and then a lot of successful small niche players in ITO, says Pat Adamiak, Vice President, Portofolio, Marketing, and Alliances, HP. "This signals the aggressiveness of the Indian players," he says.

Ross Tisnovsky, Vice President, ITO Research for the Everest Research Institute, says this acquisition signifies "a departure from the Indian's conservative attitude toward IT assets abroad." He says this apparent willingness to engage in asset-heavy transactions "will open a new chapter in the competitive dynamics in infrastructure outsourcing."

Then, Wipro set up a small software development captive in the United States, creating US jobs. "Five years ago, many American jobs went offshore to India. We will see a reversal of this in the years to come, as some of these jobs will return back to the United States," says Michael Beygelman, Senior Vice President, Adecco North America. In addition, Indian suppliers want to tap into the US's excellent infrastructure. He believes the US real estate and outsourcing employment markets will benefit in 2008 and 2009 as more Indian suppliers set up shop here because they are discovering it might be cheaper to operate in US secondary markets rather than to do everything from India.

4. China becomes not only the home of service providers; it becomes a multi-million-dollar outsourcing market.

Cook says suppliers are inking deals to service Chinese companies. "The Chinese market is too big and too rich to do it all in-house," says Cook.

5. Standardization takes hold.

Adamiak calls this "services productization." He says the major suppliers have been creating standardized building blocks for services to automate processes. He likens this standardization to the auto industry. "The industry will start to see the benefits of standardization in 2008," he says.

Pat Goepel, President of HR Services for Fidelity Investments, agrees. "Lift and shift is dead," he says. "Standardization will be the hallmark of more deals going forward."

6. Consolidation continues in the human resources (HRO) and recruitment process outsourcing (RPO) world.

Three important transactions occurred this spring. In May Beeline purchased Employer Services Corporation. Then in June Kenexa purchased StraightSource (after acquiring BrassRing in November 2006); and FutureStep, the RPO arm of Korn/Ferry, purchased the Newman Group. In August Hewitt Associates purchased RealLife HR. Then Adecco purchased TalentTrack.

"There are too many RPO firms trying to get RPO market share," says Kim Davis, former President of TalentTrack and now an Adecco Senior Vice President . He says smaller firms will increasingly become challenged as the larger firms continue to build infrastructure and regain the competitive advantage away from the smaller pure-play RPO firms. "They have found out how difficult it is to compete on a national or global playing field given their size," he says. Today, most buyers want to work with RPO providers that they can grow in to, with a global reach, not service providers they can grow out of. "Because the world is flat, TalentTrack as a standalone couldn't compete in a global environment," he continues.

In the HRO world, Northgate purchased Arinso International in June and Mouchel Parkman purchased HBS in August.

As for the big players, the Adecco executive says a mixture of three reasons is driving the buying spree: the need for product extension, the desire to enter a new market, or the necessity of acquiring infrastructure that would take too long to build.

7. Tier-2 suppliers may face a challenge next year.

Cook mentions the woes of LogicaCMG, the union of a British and Dutch company. It sacked its president because of a series of disappoint results. Six month later it still can't find an appropriate candidate. "They can't find a celebrity to take over," says Cook. "Tier-2 companies are having a difficult time finding their place and becoming a Tier-1." He suggests some may be good candidates for the Indians suppliers to purchase.

8. The megadeals are disappearing.

"The first three quarters of 2007 show the megadeal segment of the market-deals with $1 billion in total contract value or $200 million in annual contract value-- is in a long-term decline," says Tisnovsky. These deals dropped in both number and size. He says this continuing trend "is reshaping the outsourcing industry."

Jim Way, Vice President of Operations for Managed Services, Siemens says the trend today is to do pieces of a function, not everything. "Third-generation buyers are scared because they didn't get what they were promised in the past. They don't want to hand over all the keys to the kingdom. Today they just want to outsource their pain points," he explains.

9. Non-traditional suppliers win big deals.

The biggie is the US Army's training deal with Raytheon. Cook says Raytheon, a non-traditional outsourcing supplier, captured a $11.2 billion deal by leveraging its market domain expertise. (That, he says, is how traditional suppliers can compete with their Indian counterparts.) Telecommunications services providers also won many large deals this year. Cook asks, "Are they morphing into broader-based competitors in both ITO and BPO?"

10. Supplier switching is happening at a record rate.

Way says experienced buyers today are disgruntled and want to go in a different direction with a new supplier. "Buyers like the concept of outsourcing but haven't been pleased with their current suppliers," says the Siemens executive. "Even though they have a bad taste in their mouths, they don't want to take the function back in-house." He predicts the industry "will see more of that in 2008."

11. Suppliers will find innovative ways to get paid.

Poole predicts next year buyers and suppliers will increasingly align key interests to enable suppliers to share in the financial impact buyers realize from improved processes.

12. 2007 was the best year ever "for private equity firms to goggle up suppliers and release value," observes Cook.

He says outsourcing suppliers are a favorite of private equity firms because "they have significant revenue locked in over time."

The only failure this year was Atos and CSC. "But they got closer than ever before," he says. He thinks someone "will crack the code" by 2009.

The current credit crunch in the private equity market may hamstring outsourcing suppliers next year. Goepel says hard-to-find capital will slow down some of the merger talks "at a time when long-term investment is critical to outsourcing's success." Cook agrees, saying, "I think there will be a lull next year."

13. The subprime fallout will help outsourcing.

The credit crunch may benefit the industry next year because merger and acquisition activity will be lower. "We will see a positive blip in the outsourcing marketplace because outsourcing is a positive alternative to mergers and acquisitions. We'll enjoy growth," says Cook.

14. The US election will bring healthcare into greater focus for HR suppliers.

Goepel says the election and the recent GM/UAW contract negotiations made everyone more aware of the costs of healthcare. That will drive more companies to outsource their benefits and change the way HR companies handle healthcare. He predicts buyers, "who are no longer paternalistic," will turn to their suppliers to help employees figure out their healthcare options. "HR suppliers are on the front lines and have expertise in providing the support that employees need to make important decisions around their healthcare and benefits."

15. On another healthcare front, Way says healthcare outsourcing used to be a strategic decision.

This year healthcare providers were more focused on cost. "They want us to provide better service at half the cost," he says with a laugh. Siemens tries to provide better service that's budget neutral, he adds.

16. Consolidation occurred in the outsourcing advisory industry.

Information Services Group purchased TPI in October. EquaTerra purchased Morgan Chambers. "These changes will affect how deals get done," says Adamiak.

17. Offshoring is still an emotional issue for the C-suite.

Way says some of his prospective buyers are "torn between trying to make a good business decision and protecting their image." Siemens has some customers that have a clause in their contracts that allow them to pull out if they Siemens offshores any services. He expresses surprise, considering the cost and quality the supplier can provide from India.

18. The United States remains the largest outsourcing marketplace.

The Dutch market is "hot," according to Cook. But the big surprise is France is becoming an outsourcing powerhouse. "French multinationals are realizing they can't do business without outsourcing," says Cook. He predicts some big deals will come out of France next year.

Labor will be the driving factor that changes outsourcing in 2008. How companies determine who to hire and where they will work will affect the indust

Labor will be the driving factor that changes outsourcing in 2008. How companies determine who to hire and where they will work will affect the industry in two ways.

First, labor arbitrage is undergoing a metamorphosis. In the past, the megatrend was to use labor arbitrage wherever possible. Buyers found they could enjoy cost really significant savings with no impact on quality if their suppliers used labor in low-cost areas. The equation was simple: tasks that could be done remotely moved offshore.

Today, that equation is changing. Today buyers want to alter how they use employees. But now it's not just sending them offshore. Now buyers want to change other services in which labor is a component. This is changing the fundamental way suppliers provide services.

For example, how the industry thinks about providing IT infrastructure is changing dramatically. First, a component of IT infrastructure labor is moving offshore. But more importantly, other components of the labor equation are transforming because of the advantages provided by the offshore model. This is enabling a completely different kind of IT infrastructure outsourcing. 2008 will be the year remote infrastructure management outsourcing (RIMO) takes deep root.

Offshoring Leads to the Rise of RIMO

The RIMO model facilitates an asset-light outsourcing deal. Now the necessity of transferring assets has vanished. In fact, transferring assets can be a detriment in this kind of outsourcing. RIMO is moving the industry away from a one-size-fits-all model that's all inclusive to an offering comprised of a series of components suppliers can use in a plug-and-play world to optimize their infrastructure environment.

Buyers of traditional IT infrastructure deals had to buy into a trade-off of loss of control and up-front investment while hoping for a long-term cost reduction. In the RIMO world, buyers still retain control of their IT assets. For some buyers, retaining control gives them more corporate flexibility. However, now there is more management responsibility.

In most cases the cost savings are the same or greater when comparing the RIMO model versus the traditional one. So the decision is: how do you want to manage IT assets?

The Offshore Equilibrium

Trend two: outsourcing is starting to see the limits of labor arbitrage. Until now, the industry experienced an unconstrained movement of work offshore. If the supplier could document the process so someone else could perform it, off it went.

Ever since offshoring began in 1991, we have wondered just how far businesses can extend the offshore model. How many applications and what business processes can cost less through labor arbitrage? Where is the boundary between what companies can and can't offshore?

Until now there were no boundaries in sight. The stellar performance of the Indian offshore sector seemed limitless.

Now, however, we are beginning to see restrictions. We see early signs that large, experienced corporations with mature relationships are discovering limits to what they can offshore. These companies have tried to push work into remote management either by fiat or by contract. But the work somehow repurposes itself. No amount of contractual guarantees or organizational determination seems to solve the problem. That's because they've butted up against offshore equilibrium, which determines the percentage of work that outsourcing buyers can offshore, either to a third party or their own captive.

In 2008 buyers will begin to seriously bump up against those limits.

What are these limits? We have found two things always affect the offshore equilibrium:

• Buyers only face the equilibrium's challenge in mature relationships
• Each buyer has different, idiosyncratic factors that change the equilibrium percentages

Three things constrain the amount of work buyers can send offshore. They are:

• The buyer's corporate culture
• The buyer's industry or vertical
• The buyer's internal organization. For example, is its IT centralized or federated?

Historically, pundits posited that the equilibrium would follow Pareto's Principle or the 80/20 rule: buyers could send 80 percent of their work offshore and retain just 20 percent. We have found that equation is too aggressive for offshore equilibrium.

Industry Implications

This equilibrium has an important implication for the future of the outsourcing industry. It suggests that offshoring will hit a wall. We predict its growth will start to slow in the next 12-18 months.

Once again, offshoring will have to look for transformational opportunities, just like it did in the IT infrastructure management space. The nature of work will focus more around transformational opportunities rather than just lift and shift.

Labor used to be the transformation. Now it is becoming the transformer.

Outsourcing in China, Only for the Strong!

Implications: Now that “everyone” is outsourcing to India, the next big thing is outsourcing to China. The first rule is China is not the same as India. Chinese outsourcing can be necessary for survival, or it can be a money-pit for the unwary.

Analysis: Many companies have already successfully outsourced to India. Virtually every large company, and many that are not so large, have now figured out how to make Indian outsourcing work. True, wage inflation and employee turnover are an ongoing problem, but overall it is working for most companies. With that behind them, the next frontier is China. Many see China as the solution to the turnover and wage issues in India. Ironically, even many of the large Indian firms (Wipro, Infosys, Tata) already have a presence in China. Many large US technology firms, such as Cisco and Oracle, have large installations in China.

China is most definitely not the same as India. The most obvious issue is the language barrier. It is relatively easy to find skilled Indian personnel who speak English. Because India has so many dialects, many Indians use English as a common language even among themselves. This is not true in China, which has far fewer English speakers. Finding skilled technical personnel who speak English is not easy in China.

The culture and history of China are more alien to Europeans and Americans. India was a part of the British Empire for a long time, and during that time many elements of the two cultures commingled. India is a democracy, which is a familiar model to Westerners. China is not a democracy and does not have the close relationship with the West that India has experienced. Consequently, cultural issues are much greater than in India.

Economic issues abound in China for prospective outsourcers. The Chinese economy is growing rapidly and enjoys a huge trade surplus with the US. The local companies, such as Huawei, are becoming multi-nationals competitive with US or European companies. Jobs are plentiful for Chinese technical workers, both with foreign and local firms. Many large US companies have had a major presence in China for many years. Such large companies are ideally positioned to hire the best and brightest.

Costs are escalating. While it is true that salaries are much lower in China than in the US, salaries are only one piece (admittedly usually the biggest piece) of the cost pie. Real estate costs in the more desirable areas are more than in many locations in the US. For example, desirable tech park locations near Beijing command lease rates significantly higher than in the best areas of Silicon Valley. Communications costs to anywhere in China are quite high. It is common to pay 2-3x as much as for data lines in China than for comparable lines in the US.

Overall, outsourcing to China is something that everyone should probably consider, but the decision is not a simple one based solely on lower salaries. Overall costs must be taken into account, along with whether or not the amount of money to be committed to China is enough to gain critical mass. China is not a virgin territory waiting to be plundered! On the contrary, it is more like the Wild West, where entrenched powers are already in place and the unwary get fleeced.

India plus China in ICT

By D. Murali and G. Padmanaban

Is it ‘India and China’ or ‘India vs China’? It is the former, says Mr James M. Popkin, co-author of ‘IT and the East’ (www.tatamcgrawhill.com).

There is an increasing recognition, he observes, that India and China possess significantly complimentary skills in most areas of the ICT (information and communication technology) ecosystem.

“For example, China’s overall success in the hardware segment and India’s overall success on the software front, China’s success being driven by high levels of FDI (foreign direct investment) even in the ICT sector, and India’s primarily home-grown investment environment etc.”

Pooling best practices and learnings on what has contributed to the success in each of these areas will provide an order of magnitude greater benefit to both countries, foresees Mr Popkin, interacting with Business Line, over the e-mail.

“The important issue is that this is NOT a ‘zero sum game’. In other words, given the size of the potential global opportunity, India’s gain need not be China’s loss and vice-versa!”

‘IT and the East,’ the Harvard business School Press book, which Mr Popkin co-authored with Partha Iyengar, is about ‘how China and India are altering the future of technology and innovation’.

Excerpts from the interview.

How can India and China work together and move the technology innovation engine to the East?

In ‘IT and the East’, we lay out a Chindia framework which enables the measurement of progress China and India can make in driving innovation. It has two dimensions: geopolitical alignment and depth of relationship.

There are five categories of alignment: People, Politics, Policy, Patterns of trade, Patents and Policing. China and India can use this framework to identify and drive closer levels of relationship across these dimensions.

Do the two countries have to promote mutual trade in services too?

Yes I believe both countries would benefit from promoting each other’s IT services in their own country.

For India, doing business in China brings: 1) access to a large pool of well educated engineers; 2) access to China’s large domestic market; 3) access to North and East Asian markets; and 4) geographical diversity of supply.

India is suffering from a skilled IT labour shortage in its domestic market since many skilled Indian IT workers prefer to work in the export industry. I think this creates an opportunity for Chinese companies to sell IT services and outsourcing to domestic Indian companies.

Here too the skills are VERY complimentary. In China the focus is more on services to the ISV (independent software vendor) community – that is considered ‘sexier’ by the companies as well as individual employees, whereas in India the bigger focus is on delivering services to the end-user enterprises.

There are significant differences in both of these constituencies that need very differing kinds of investments in people, process, and infrastructure that each country can ‘teach’ the other.

In the current scenario what are the strategies that the firms in the West should adopt in doing business with India and China?

We believe there are eight priorities that Western companies need to focus on now. For each of those priorities we have identified a set of actions and competencies that they need to develop. The eight priorities are:

1. Government policy formulation by industry

2. Rural development investment programs

3. Research, design and development

4. Market development

5. Chindia opportunity

6. Resource development

7. Local expertise

8. Cultural understanding

What are the daunting internal and external challenges India and China are facing in their quest to become global IT super powers? And what can be the strategies to overcome these challenges?

We have identified two critical uncertainties for each country in terms of the future of their ICT industries; and in some sense their economies overall. For India the state of the physical infrastructure is a major drain on economic activity and progress.

More specifically for the IT industry is the question of whether India can educate and train enough people to propel IT into being a far larger contributor to overall economic activity.

In China we believe a key issue for its future role in the IT industry is whether it can show itself to be a source of significant technological innovation. The current level of government involvement in the economy creates a dampening effect on innovation.

Have India and China been able to bridge the cultural gap even as the two countries race ahead in IT? Can joint ventures between companies from the West and the East help in this regard?

Many cultural gaps between the people of the two countries still exist, caused perhaps by relatively low levels of tourism. Food remains an issue of course, e.g., it is hard for Indians to find veggie meals in China and the Chinese tire quickly of curry for every meal in India. Joint ventures at the company level have and will continue to show the power of the Chindia model as we demonstrate with case studies in ‘IT and the East’.

India and China have had differing success levels in bridging different ‘cultural gaps’. India has been phenomenally successful in bridging the culture and language gap with the English speaking countries of the world, most notably the US and the UK, and to some extent Australia.

China on the other hand has had notable success in dealing with Japan, Korea and Taiwan (where India, especially in Japan, has had NO success or very limited success!). Again, these are areas where both countries can learn from each other.

Chinese companies are increasingly hiring Indians at senior levels to help them ‘crack’ the English speaking market, while Indian companies are trying to leverage their China presence and Chinese resources to try and better address the Japanese market.

Are alternative locations coming up to threaten the momentum of fresh business to India and China?

Certainly labour arbitrage is not unique to China and India and you see significant development of offshore/nearshore locations in Southeast Asia, South America and Eastern Europe.

There are 53 distinct countries that Gartner is tracking that are all trying to take some piece of the global sourcing pie away from India (primarily) who is the undisputed leader at this point in time.

However, the biggest challenge that most of these countries face is the issue of population and the size of the graduate pool entering the work force. India and China are the only two countries that have this basic ingredient to address large-scale resource requirements.

Ireland, which was an offshore ‘star’ earlier is a classic example, where its success as a low cost location dwindled because of population issues, and today it is no longer talked of as an ‘offshore’ destination.

Can the infringement of intellectual property right (IPR) crop up as a major roadblock?

Yes IPR is an issue in both countries. India still lags somewhat in the development of a legal structure for IPR protection. China has a more developed legal system of protection but enforcement remains spotty. This is a major concern of western companies doing business in both countries.

Do you find the cost arbitrage losing its edge as a trigger for offshoring, with costs rising in these two countries?

Outsourcing based on cost alone has not always paid off strategically for many companies. While cost is an important factor, other considerations come into the success equation for companies thinking properly about their multi-sourcing strategy. Rising costs in both countries will force buyers and sellers to develop more sophisticated value propositions.

Those that cannot identify or articulate a long term value proposition beyond cost arbitrage should really re-think their global sourcing strategy or not view it as a strategic but more as a tactical time-bound initiative and make decisions accordingly.

Should India and China also focus on domestic IT business as a strategy?

Certainly each economy will begin to develop outsourcing demand if current rates of economic growth continue over the next 5-10 years. I think today’s Indian domestic economy is particularly ready for outsourcing because of the skilled IT labour shortage I mentioned earlier.

Further, to develop and propose higher end capabilities in the global market, it is imperative that these capabilities and skills be honed in the domestic market as the opportunities arise – and they definitely are today in India for sure, and will shortly appear in China as well – since it is more difficult to make a pitch for these services globally if a vendor has no track record in doing that kind of work.

Why would a global client trust that a vendor can do some really high competence work in a particular industry (e.g. telecom) if that vendor has lost to their competition (primarily global vendors) for exactly that kind of work in the domestic market. It will hurt the credibility of the local vendors in the global markets if they do not take up some of these domestic projects as well.

Is there anything that the developed countries should be doing, but they aren’t, to reverse the offshoring trend?

I refer again to the eight priorities we lay out for companies building their India, China and Chindian strategies. Developed countries should consider these priorities and develop policies and programs as appropriate to take advantage of these opportunities.

There is no ‘reversing’ the offshoring trend – it will only get refined (e.g. morph more to global sourcing) and fine tuned as time goes on. Eighteen months ago we said that ‘offshore sourcing has become mainstream’, which meant that for many enterprises – and an INCREASING number of enterprises – offshore / global sourcing was becoming the default way they addressed their sourcing needs.

It will be difficult to ‘turn the clock back’ on this trend. We’ll see some realignment in terms of where the work gets done, the ‘sweet spot’ of each of the countries on the supply side may evolve or change, some of the work may go back to the developed countries (work which should probably have never left there in the first place) etc., but there will be no mass scale reversal.

Bio:

Mr James (Jamie) M. Popkin is a group vice president and Research Fellow in Gartner Research responsible for the Business Intelligence and Information Management research group. Prior to this position, he was responsible for Gartner research content strategy in China, India and Korea. He has 15 years of experience at Gartner, and 18 years in the IT industry.

Prior to joining Gartner, Mr Popkin was with the Deloitte & Touche LLP IT practice, managing a variety of technology strategy and development engagements. Previously, he served as a board member of the Association for Image and Information Management (AIIM) International Board of Directors.

An economics graduate from Connecticut College, Mr Popkin holds an M.A. in Public Policy from Kennedy School of Government at Harvard University, and a Certificate of Management from Darden School of Business at the University of Virginia.

Named one of the ‘50 Most Influential People’ by ImagingWorld (IW) Magazine, Mr Popkin is Senior Advisor to the China Business Continuity Management Association.

In Offshore Outsourcing, China's A Different Ball Game

China is like no other country on the offshore outsourcing landscape.

It has a rapidly growing base of low-cost IT pros, but other dynamics dominate the picture. With economic growth of more than 11% a year, China's poised to become the world's third-largest economy, and many CIOs think they need a presence in the country. Call it the "just gotta be in China" syndrome. Yet the last decade of offshoring has taught them the risks--like not getting the right talent for projects--of jumping into a hot market.

British telecom provider BT Wholesale has established a small IT center in China and a relationship with an IT services provider there. "Our philosophy is not to study it to death, but to get in there with a relatively modest approach and see what results we can deliver," says CIO Clive Selley. "It's a massively important, vast population with a fast-growing economy, and we need to be able to understand the marketplace."

Tata Consultancy Services plans to hire slowly in China so it can focus on keeping those it recruits. "We would like to go from the 1,000 people we have in China now to 20,000 or 30,000, but in a way that the attrition rate is low," says N. Chandrasekaran, chief operating officer at TCS.

Companies specializing in China-based IT outsourcing include ChinaSoft, DarwinSuzsoft, NewSoft, Symbio, and WorkSoft. In August, private equity firm Francisco Partners invested $48 million in DarwinSuzsoft, a U.S. company that employs 800 Chinese engineers, and Sierra Atlantic, a U.S. company with 1,100 developers in Hyderabad, India, acquired ArrAy, which has 200 technologists in Guangzhou and Shanghai. Challenges include a much lower rate of English competency than India has and looming risks of inflation from an overheated economy.

Five years ago, would-be customers focused on the security of their data and intellectual property in China, says Dean Stevens, general manager at Symbio, which has offices in China and Maryland. He rarely hears that concern today; now the focus is on how China will avoid India's dilemma. "The No. 1 concern I hear is, 'Can you get the engineers and resources I need to get my job done, and what's your retention like?'" Stevens says. "They'll often say, 'The problem I ran into in India was availability of resources and attrition, and don't give me that same problem.'"