China years behind India in Software Technology- Mc Kinsey
By siliconindia   |   Saturday, 12 March 2005, 20:30 IST
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BANGALORE:Despite its emergence as the manufacturing and technology powerhouse, China's software industry is no match for India and remains years behind rival India, according to a report. International Research firm McKinsey said that China remains years behind India in software development due to the fragmentation and over dependence on the domestic market. The report said consolidation is needed in China's software sector before it can attain the scale and expertise that Indian companies have attained to win big international projects. It also said though China has almost three times as many software companies as India there has not been much gain. "Fragmentation exacerbates the Chinese industry's other problems, including weak process controls and product management," the study said. Although revenues from IT services are rising, they are just half of India’s $12.7 billion. Chinese IT companies’ growth is driven mostly by the Internal demand and Japanese customers who seek low value application development. China’s nascent foreign software businessa counts for just 10 percent of the total revenues. By contrast, software accounts for 70 percent of India's. "Many projects in China are below optimal scale, suppliers often compete on price and collecting payments can be problematic," the report found. China has 8,000 software service providers; almost three-quarters have less than 50 employees. India on the other hand has about 3,000 software companies. Of these at least 15 have more than 2000 workers and the top three firms such as TCS, Infosys and Wipro — have about 25,000 workers. Some could acquire Chinese software developers, the study added. Just six Chinese firms have the Software Engineering Institute's Capability Maturity Model while each of the top 30 Indian firms hold this certification. China's training and employee incentives are also lacking, the study found. Chinese "companies must attain scale and abandon their project-based mentality and adopt a new focus on giving clients long-term value," it concluded.

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