China's software industry
As part of the globalization lecture, I invited Zhang Qiwen, an executive of a large software company in China to give a lecture to my Software Engineering class. Following is what he said:
“In the past ten years, the Information Technology (IT) industry of China has developed rapidly but also faced some serious challenges. The speeds of globalization and changes in technology have impacted the IT industry significantly as it can NOT adjust quickly enough to meet global demand. The IT industry does not have skilled strategists to look forward to plan ahead so the bureaucracy management has to react to changes, often make mistakes, and our industry have missed many good opportunities. Compared with India's software industry, China still has a long way to catch up.”
“China's software industry is small as compare with India. For example, all of Shanghai's software export is making much less than Infosys, a single Indian software company. There are over ten thousand software companies in China but most are very small. Only few companies have over 1000 employees but the issue is NOT SIZE but SKILLS. Most Chinese software companies do not have domain expertise and project management skills. The majority of them are still focusing on coding and testing but without proper management and trainings, most projects are chaotic, have high defect rate and that is why China is losing a lot of business to India. Today China's software industry has over 600,000 people which are still small as compare with over five millions in India. The annual supply of IT graduates in China is estimated at 180,000 against a demand of 850,000 so there is a severe shortage of IT workers, especially software project managers and domain specialists.”
“Quality in China's software companies is weak as compared with India. Although ISO and CMMI are popular among Chinese software companies but the fact is they are mostly for display rather than actual. There is several companies received CMMI level 5 but it is only on paper as their actual quality is no different than any lower level. The main problem is university's trainings are still based on the “Classic” program of the 1960s and 1970s where coding and testing are the main focus. Students are trained to write code but not taught about engineering, process or design. Even today software engineering is relatively unknown and domain specific skills are only taught in top universities. Currently it is difficult to hire young professors as most of them prefer to work in the industry rather than academic. Most universities only have “old professors” who were trained thirty to forty years ago, they only teach what they know and students are victims of an archaic education system. Even with many pressures from government, the education system is still slow to change despite the software industry's demand for a large number of skilled workers. Because software education training is weak, there is a steadily decline in the quality of university graduates which force many students to seek education oversea.”
“China's hardware industry is among the best in the world. China is the third largest hardware manufacturer after the U.S. and Japan. China's physical and telecommunications infrastructure provides an important foundation for the development of the country. The government invested aggressively in upgrading roads, airports, ports and other physical infrastructure, particularly in the special industrialized zones in coastal areas. Many foreign hardware manufacturing companies are relocated there and they provide additional trainings to workers and it helps the development of the computer and telecommunications manufacturing sectors. But today hardware is beginning to lose the competitive edge. To expand the import market, companies lower their prices so their profits are decreasing fast. To make up this deficit, software industry is now considered important. China recognizes that it cannot depend on hardware alone but must promote the software industry as it is the “soul” of the information industry during the transition from the industrial age to the information age.”
“To promote the development of software market, China can learn from the experience of India. Today India's global IT services market have achieved US $102 billion and could reach $200 billion by 2020. Their high growth, high values are in domain specialization, systems integration, services management, software support; hardware support; and IT consulting and education. All of these are lucrative business with high profits than the low level skills of coding and testing. For example a domain specific worker in mobility can make over US$ 3,000 on a monthly contract as compare with a Java programmer with $400 - $ 600 monthly contract. To be competitive, China must change the current training in university to develop skilled workers who can compete for better jobs. Although the ministry of information technology has pushed forward innovation plans to facilitate the development of software industry but there are resistances as any change would threaten some people's positions. Without proper trainings, it is impossible to develop a strong software industry and without a skilled workforce, China cannot export software and keep its economy growing. If China can improve its software education, it can capture a large IT market because there is a shortage of skilled workers all over the world.”
“Currently India's software industry is based on its export strategy that focusing on two largest IT markets, the U.S and the U.K but ignore the non-English-speaking markets like Japan, Germany, France and Italy. These countries which account for 30% of global IT market, a potential of $45 billion annually and these markets are now open for competition. Other countries such as the Netherlands, Sweden, Norway, Finland and Australia also offer growth potential along with Switzerland, Spain and Belgium markets, so there are many open markets to compete. To capture this market, China is currently improving its information technology infrastructure to better its competitive capability. Our strategy is not a copy of India's service export but different. Since our hardware manufacturing is well established, we will sell our equipments at lower prices but require customers to use our proprietary software. The ultimate goal is creating both hardware and software products with its own intellectual property rights, NOT copy of somebody else.”
“In order to achieve that, China has begun to improve the education system by focus more on software technology that connects all hardware devices into one central system called “The Internet of Things” where everything is controlled by software. China government is overhauling the traditional software industries to improve its capability by encouraging merging and acquisition of many small companies into larger conglomerates so they can compete more effectively in the global market. These companies must be able to deliver products and services that meet customer requirements. They should be delivered on time, must work the first time, and is user friendly and technically well-designed. This can only achieved by having good professional workers who are conscious of customer satisfaction. This only work when all workers are following well-defined processes, using the best development method and tools. Therefore the training of software engineer is critical to develop a quality culture can meet all these requirements.”
“China's and India's software industries started at the same time, but the difference between the two countries grew bigger during the first two decades of development. The main reasons for the big gap are the insufficient education and training and the insufficient protection of intellectual property. If we can solve this gap by improve the education system and protects intellectual property, we can develop a stronger software industry that can compete with any country in the world.”
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
