Engineering Graduates China India United States

Business, Outsourcing.

Where in the world is the best place to offshore your r&d: china or india? - insight. Top companies have long found it makes good business sense to outsource a business function - from making parts to delivering payroll - to wherever it can be done the best. The reality of business is that companies must do more with less to stay competitive and continually search out new ways to improve products and time - to - market to lead their markets.

With the Telecommunications Act of 1996 came the wave of fiber - optic cable and a new capability that truly enabled the IT departments of U. - many of these same companies have r& d departments developing embedded software and hardware and now the ctos want to leverage offshore vendors to not only reap the same benefits of lower wages and expanded productivity, but bring better products to market sooner. S. companies to plug into offshore outsourcing firms and take advantage of lower wages and cost efficiencies. Although the potential benefits are there, companies must consider two things before offshoring embedded R& D technology. Second, a country' s human capital may be good quality for IT projects, but may not be the best choice to meet the higher skill levels required for R& D embedded technology. First, the requirements of an R& D department that does embedded technology development for the marketplace and those of an IT department that serves employees are not the same. Basically, the technology offshoring choices boils down to two: China or India.

India, known as" the offshore call center, " is the acknowledged leader in IT and business process outsourcing( BPO) .1. - china is known as" the world' s factory" and produces$ 60 billion worth of consumer electronic goods a year. Whether a CTO is searching for an offshore outsourcing vendor for a single project or a long - term partnership, the vendor' s country should be a significant part of the due diligence. The highly respected National Academies notes in an October, 2005 report that a company could potentially employ five chemists in China or 11 engineers in India for the cost of one chemist or engineer in the United States. Engineering Talent Pool. Wages are lower offshore, there' s no question about that. Pay attention to attrition and wages.

Long Circle, suggests that companies, however must look further and examine additional important criteria when searching for the best country to outsource embedded product research and development technology. . - the number one reason most companies send work offshore is because wages are less. S. to make offshoring worthwhile. Experts recommend that engineering wages stay within the range of 20 to 50 percent lower than wages in the U. However an important factor to keep in mind is that the rules of supply and demand apply in offshoring and inevitably result in rising wages. Wages for IT project managers have increased by 23 percent annually over the last four years. 2.

According to a report released in June, 2005 by management consulting company McKinsey and Company, India faces a shortage of middle managers due to the growth of India' s IT industry by approximately 20 percent annually over the last 10 years. - attrition rates in india have been estimated at anywhere from 20 percent to 50 percent. According to a Businessweek article in February, India, 2005: Good Help Is Hard To Find, a prominent vendor is using creative ways to hire middle managers and to reduce attrition - from finding homes for new hires to helping their children with school admissions. Turnover is a problem and many firms are looking for ways to retain their workers in addition to increased wages. Industry analysts acknowledge that India is the seasoned player in offshore IT technology and wages are rising, while China is newer to the offshoring industry and wages in China are lower. . Although both China and India have excellent universities and engineering programs, a very real concern for a company looking to offshore embedded systems R& D development is: Does this country have a large enough pool of R& D engineers, both new graduates and young engineers with seven years or less of experience? Is the R& D pool deep enough, with enough new graduates and experienced engineers?

If not, supply and demand may eventually drive the costs up and possibly impact deadlines. - the exact number of four - year engineering graduates each country produces yearly is open to debate. New graduates. The statistics cited in the first row of the chart below have been widely quoted in the media, from Fortune Magazine to a speech by Senator Ted Kennedy. Engineering Graduates China India United States. However according to the Wall Street Journal online, these figures are misleading and no one can track down a concrete and reliable source for where the numbers originated.

Source: Unknown 600, 000 70, 000 350, 000. - the statistics in the second row of the chart are from a study released in december, 2005 by duke university( and also widely quoted in the media, including the christian science monitor) that cites different numbers for the engineering graduates in each country. Source: Duke University 352, 000 137, 000 112, 000. Regardless of the actual number, statistics show that China produces the most engineering graduates each year. The offshore country' s workforce must have depth of experience as well. Experienced engineers. In a press release issued in February to review the industry' s performance during 2005, NASSCOM said that in India, IT service workers clearly dominate engineering R& D workers.

This trend is expected to continue during 200 By comparison, a McKinsey and Company report says that four percent of the total university - educated workforce in India has an engineering degree, compared to 33 percent in China. 2. - according to nasscom, in 2005 there were 316, 000 workers in the ites - bpo segment and only 93, 000 workers in the engineering services and r& d and software products segment. When selecting an offshore vendor for embedded technology, the vendor must not only have sufficient human capital( both new graduates and experienced engineers) to complete the development project, but the experience of the workforce must be product research and development, instead of merely IT experience. Potential culture and language barriers. University educated workforce. with engineering degree: India: 4% China: 33% . Although engineers do not necessarily require a good command of English to perform their job, communication could be an obstacle unless there are English - speaking employees at points - of - contact with the customer.

While English is not as common for the average Chinese citizen, the situation is different for college graduates in China. - in india, english( although not american english) is the second language and companies can expect offshore employees to communicate well. To be admitted to college in China, high school graduates take five exams, and three of those exams - Chinese literature, and English, math - are required. The result is that top university graduates in China do have good English language skills. To attend the top universities, students must obtain near perfect scores on their exams - including English. Infrastructure: How are the roads and the utilities? China is taking great pride in hosting the Olympic Games and is focusing on improving infrastructure for the expected visitors from around the world.

On August 8, the world will, 2008 focus on China when the 2008 Summer Olympic Games begin in Beijing. - according to news reports: beijing will spend an estimated$ 38 billion for new urban infrastructure, including building and renovating roads and railroads, building subway and light rail lines and building sites for olympic venues. natural gas will replace many coal - burning heating plants. a third airport terminal in beijing will double the airport' s capacity. For example, the International Diamond Exchange( IDEX) noted in a recent online report that although India potentially could become the leading market for diamonds in the future, India currently faces major obstacles such as India' s heavy dependence on imported energy and poor infrastructure. India' s infrastructure, on the other hand, is generally viewed as lacking. IDEX laments, "India' s infrastructure is dismal. When evaluating outsourcing vendors, companies should keep in mind that U. For example, roads are poor and land - based communications don' t work. " However, according to an article on indiadaily. com, "... improving India' s potholed highways, congested ports and erratic telecommunications and blackout - plagued power service is vital to drawing foreign investment and bolstering the economy further, economists say. " The Indian government has forecasted growth of 9 percent during the year ending March 31, which means India, 2005 has the second - fasted growing economy after China. 4.

S. personnel will undoubtedly visit the vendor' s offshore facilities from time to time. - both india and china have reputations that are less than stellar when it comes to protecting intellectual property. Intellectual Property Protection. China especially is notorious for copyright infringement. S. business was sued for patent infringement in Texas federal court by a mainland Chinese plaintiff. However media sources reported recently that an intellectual property milestone was reached when a U.

Experts predict that when Chinese companies begin to police their own IP infringement, the Chinese government will become more vigilant in protecting the intellectual property of foreign countries within China. - companies should scrutinize a potential vendor' s security protocols to ensure that a potential vendor adheres to the best - of - class security protocols found in u. China' s membership in the World Trade Organization( WTO) is also viewed as driving reform. S. companies. When early outsourcing projects involved IT and Business Processing Outsourcing( BPO) the majority of companies turned to India. Conclusion.

However, outsourcing IT development and BPO is not the same as outsourcing embedded product research and development. - the requirements and skill levels are not the same. That' s comparing apples to oranges. Companies must evaluate not only the outsourcing vendor' s qualifications, but the vendor' s offshore location as well to ensure companies realize the value they want to achieve. About the Author. Long Circle recommends for a company' s R& D department to realize the greatest return on their outsourcing investment, there is no better place in the world than China.

Hayden Hong, the founder and CEO of Long Circle, has over a decade of outsourcing and consulting experience. - in 2005, hong merged the two companies to provide u. Prior to founding Long Circle, Hong was the president and founder of MacaoDude, a consulting firm that counts among its clients Motorola, and various high, Nortel technology companies in the Boston 128 area. S. companies with low - risk, convenient access to China' s engineering talent, and emerging markets, manufacturing industry. S. - China offshore R& D projects for GE, as well as management positions at Broad Reach Communications, a GE partner. His background includes managing U.

Hong received a MSEE degree from Purdue University and a BSEE degree from Northeastern University, graduated magna cum laude. - long circle provides outsourced engineering services to companies whose products and services rely on embedded software and hardware technology. About Long Circle. Long Circle and the Long Circle China Center of Excellence enables U. To learn more about Long Circle, visit http: //www. longcircle. com. S. companies to reduce costs, and broaden market, increase engineering bandwidth reach by providing low - risk, strategic access to China' s engineering talent, and emerging markets, manufacturing industry.