I asked the following question:

What are your opinions about the current global slump and their effect on China outsourcing? I got my own opinions but am interested in yours.

Looking at a focused answer related not only to the U.S economic spill over, but more on the global markets current issues and how they are currently affecting the China outsourcing industry, or, how they could in the future shape China's outsourcing industry. Every answer counts.

I got the following answers (just to share):

So far there has been no down turn in our business because we are linked to oil and gas projects and mass engineering projects which so far have just not been effected. Also we have increased our work with French companies for example who also seem relatively uninfluenced by recent events.

-CEO & Chairman for a FORTUNE500 company

I think that the recent "global slump" will increase the number of Western companies looking to China for services outsourcing. With the slowdown in the States companies will look for growing markets like China to expand their businesses. For the most part, when Western companies come to China for IT or BPO outsourcing it is part of a larger “China strategy”. Setting up a captive center or building relationships with a local outsourcing suppliers are often a first step in a China plan. So, I foresee that more companies will accelerate their China plans or starting to develop their China strategy causing an increased demand for outsourcing services. However, that being said, I agree with Paul that local providers will need to gain a better understanding of foreign business culture to fully capitalize on the opportunities.

- VP Global Outsourcing Top100 ITO & BPO firm

Hi Michael, Congratulations with the Chinese Revolution Day! You will probably have long holidays? Impact of the US and global economic slump impacts from both sides - good and bad. Many companies freeze product development, many freeze application upgrade, investors slow down creation of new startups. On the other hand those who used internal software development or US providers start looking for more cost effective providers. Our US channel delayed launch due to hurricane Ike consequences. We experience slow down with our clients too. Couple of startups ran out of money and we lost them. Anyways, we continue working on sales for both companies.

-CEO & Chairman for Ukraine's Top ITO firm

Our firm is working in US and Middle East markets and this eases the cyclical economical ride. The economical situation may have positive effect on outsourcing by pushing the cost down at the source country and encourage businesses in US to outsource more to reduce cost of doing business.

-Managing Partner for a Top Global IT Investment firm)

Michael, the larger pie of the growth in the china outsourcing market is driven by regional support for global clients in the Asia-Pacific region, especially back-office processes that require specific language skills, such as Mandarin, Cantonese, Japanese and/or Korean. The drivers like resource availability & low cost will make sure that this pie should have very limited impact of current Wall Street turmoil & European slowdown. With fast rising domestic market, population base & excellent governmental support, China outsourcing industry is growing gradually in staff augmentation and project based engagements. However many firms are still cautious about outsourcing ADM kind of work to china and current market situations will not permit them to take such adventures decisions. This will lead to another one or two years limited growth in large annuity kind of business.

- ITO of a Global Outsourcing Top100 ITO & BPO firm

Michael, before the current global slump, my viewpoint was that outsourcing to China was starting to slow and that companies were beginning to seek other markets for outsourced manufacturing (Vietnam, etc) due to rising commodity costs, rising labor costs and disappearing export subsidies in China. Now, with business growth slowing globally, China outsourcing may actually benefit as there could be downward pressure on those cost increases, thus allowing those factories to hold on to their customers who were leaving for lower prices. The only key factor which could change that trend is oil pricing and how it affects freight costs - with higher oil and a lower US Dollar, some production might actually come back to the Americas.

-CEO Renowned S. American ITO/BPO firm

I beleive that this will continue to be an opportunity for China but that Chinese outsourcing companies will need to package themselves more effectively to better reach companies in foreign countries. Rather than foreign companies reaching out to China, China will need to find more sophisticated means to offer their services to companies that perhaps wouldn't normally have considered outsourcing to China. This means a better understanding of foreign business culture and networking.

-Chief Consultant at U.S major automotive outsourcing firm

Export from manufacturers in South China might will be influenced in some degree, but software and service outsourcing to China would continue to increase, in my opinion. Both multinational companies and SMEs will find opportunities in China or Asia, they can't afford to ignore the market, globalization is the practical way to keep ahead or for international growth.

-CEO of our competitor in China

One thing I've seen is a greater focus on their own market - targeting more production and service to their local economies.

-VP at a Global100 ITO firm

Production will have the match a lower demand and Chinese and other emerging markets will have to increase significantly to offset a reduction of growth in both USA and Europe. For my point of view I think we will face a slower growth in 2 to 3 years and a moderate growth from that on. We have also geopolitical concerns and a sealed new Cold War going on with both Russia and USA trying to influence the leadership of this new growth.

-CEO of Top European outsourcing firm

Final thoughts:

From these responses and others that can be found on my linkedIN: ## http://www.linkedin.com/in/mikesabai ## the economic slump is not as bad as its painted and just another 'correction' in the global economic system that was heading our way sooner or later.

“ Don’t be scared of China – the country is perfectly positioned to be our most powerful ally (lack of democracy notwithstanding, of course). But if there is anything to worry about, it’s not China’s massive military, it’s the economy, stupid!“ (Thomas Barnett*) Because Nixon went to China and our gateway was born.

When Nixon visited Mao in China in 1972 and reopened diplomatic relations with China, he enabled the most profound global economic dynamic of the last century: China’s historic emergence as a worldwide market force. Nothing shapes our world today more than China’s rise, and nothing will shape our planet’s future more –for good or ill- than China’s ongoing trajectory. If Nixon opened the door, then Mao’s successor Deng Xiaoping led the Chinese people through it. Unlike Gorbachev, Deng chose to tackle economic freedom before political liberalization. Deng kept China stable during the fragile first years of market reform. So Deng would be identified as a modernizer who unleashed a generation’s immense creativity. In other words, they decided that markets were the first, best instruments for generating positive change in China. So, a bargain with the military was made. Deng won military support for further market reform so long as the lid was kept on political change, and the army was afforded enough of a budget to modernize. The Party would remain supreme, but state involvement in the economy would shrink and private business would be encouraged along with investment from, and trade with, the outside world. China may be an ancient society, but it’s also a young society growing up very quickly..and unevenly.

China’s modernization strategy included slowing population growth through the “one-child policy”. Yet China remains huge: 1.3 billion people crammed into a country no larger than the United States. Imagine inviting everyone in the Western Hemisphere and half of Africa to come live inside the U.S., because that would also give you China’s crowded mix of rich and poor. The most profound legacy of the one-child policy is that China will grow very old, very fast. Right now the country enjoys a demographic sweet spot: plenty of workers supporting relatively few children or elders. But once you restrict the baby supply, as they’ve done, the population as a whole moves up collectively in age, meaning that China will rapidly progress towards our “Florida mark” (20% of the population above age 65) in just two decades. The U.S. will hit that mark around the same time. If we’re struggling with this profound shift with all our wealth, how much harder will it be for China, weighed down with hundreds of millions of impoverished peasants. Here’s one thing to remember, when anyone tries to sell you on China running the world someday soon, that China will get very old before it gets truly rich, something the world has never witnessed before.

China’s transformation echoes much of America’s past…the good, bad and ugly. Remember that China’s true “communist” period was just three decades out of a 5,000 year history, the rest of which featured a social bent towards markets in general (the Chinese love to gamble, for example). Remember that they’ve had past periods of serious global trade connectivity (don’t forget the Silk Road!). Add in the strong focus on family ties and a deep spiritual history that has long featured free competition among various faiths….these guys are not from another planet! China is in the historical vicinity right now of “rising America” circa 1880 –absent democracy of course. Once you realize that, then depending on where you go around China, you can locate yourself somewhere in the last 125 years of America’s own ascendancy. The nation is likewise undergoing a construction and investment boom that’s similar to 1920’s America, prior to the Crash (that should give pause to those concerned with global economic stability!). China’s banking and financial industries are about as regulated as ours were prior to the Great Crash of 1929. But there’s no sign of a slowdown, Shanghai already has 4,000 skyscrapers, twice as many as New York, and plans another thousand more. Corruption-wise, it already consumes upwards of 5% of China’s gross domestic product. In a “flat world” of economic hyper-competitiveness, such inefficiency eventually costs too much. Chinese citizens are simply growing angrier and more demanding with each passing year and this will force China’s legal system to clean up its act. China’s rapid and deep integration into manufacturing means that Chinese products permeate our lives – at some risk

Globalization tends to integrate trade by disintegrating global supply chains. By breaking up these chains, globalization spreads various segments of production and assembly across those economies that offer the cheapest labor for each particular stage. China has cleverly inserted itself into a long list of these chains, becoming the final assembler of note in toys, cell phones, CD players, computers and auto parts, to name but a few. By doing so, China has consolidated much of Asia’s previous trade surpluses with America into its own booming bilateral trade with the U.S. So we’ve always had a huge trade deficit with Asia as a whole. Remember that this situation hides a lot of complexity. Foreign corporations control the majority (approx. 2/3rds) of this production for export. American companies in particular dominate China’s U.S.-export sector, meaning it’s basically our companies renting Chinese labor and keeping much of the profit. The Chinese export that sells for hundreds of dollars in the U.S. nets only tens of dollars for the Chinese economy. That’s how Wal-Mart, the single biggest source for Chinese exports in the world, keeps its prices so low. Naturally, China’s deep penetration of the U.S. market has raised product-safety issues. Any economy that is growing as fast as China’s cuts plenty of corners. But realize that China learns by scandals just as America did over the past century. A generation ago, such scandals would elicit yawns from China’s ruling elite, but now, with the Communist Party’s legitimacy riding on economic expansion, they’re taken with the utmost seriousness. In short, China’s government is starting to act more like a business which recognizes that its reputation is often its most important asset, because fierce competition means that today’s mistake allows somebody else to steal their customers by the start of business tomorrow.

Because China’s demand for resources is altering global market is in profound and perverse ways. China’s explosive economic growth forces it to suck in resources from all over the world. Blessed with too many people, China is short on just about everything else, arable land, water, energy and raw material of all sorts. Thus, the only way China managers to serve as globalizations “manufacturing floor” is to become a leading global importer of virtually any commodity you can name, from cement and copper to oil and gas. The inescapable truth is that China’s scramble to find resources means it has to cut deals with anybody, no matter their disreputable record. Obvious there’s long term danger in this do to the instability of the countries that they make deals with. But we’ve done the very same thing in the U.S. in the past.

Because as China builds out its infrastructure, it can set a good or a bad example to developing economies . American businesses face a key decision: dive into China’s dynamic markets or risk missing out on their coming wave of innovation. Nowhere is this more true than in infrastructure development, which is expanding like gangbusters in China right now and will continue to do so for the next couple of decades. Good example: China is building freeways like crazy. In about 20 years, it’ll have roughly 50,000 miles of them, the equivalent of our interstate system. In that time, the world will spend $10 trillion for infrastructure development in energy ($6 trillion) and water ($4 trillion). Most will happen inside China and India at a pace not witnessed on this planet since America spread its network westward following our Civil War. Now add in four times as many cars and trucks that will be on Chinese roads in 20 year’ time, along with far more urbanization and industrialization…sustainable? Well, guess what…the Chinese themselves aren’t exactly clueless on the subject. After all, they live there. So we can bet that the Chinese, along with the Indians and emerging markets elsewhere will be smarter than that. Not because they want to be, but because they’re forced to be. These rising economies will have to zip where we zagged, and how they zig will be important, not just for the “advanced” West, but for all those emerging marketing to come in places like Africa.

Because we’re less than five years from a new generation of Chinese leaders with whom a far stronger relationship many well be built. China is on the verge of a generational leadership change that will profoundly shape its emergence as a global power over the next decade. America should take advantage of this new group’s eagerness to play an actively constructive role in international affairs. The current leadership, or fourth generation of leaders, are represented by President Hu Jintao and Premier Wen Jiabao, a risk-avoiding pair who have been quietly at the helm of “peacefully rising” China since 2002. Internally their focus has been on harmonizing the huge imbalance between the booming coastal provinces and the left-behind rural poor of the interior. China’s fourth generation leaders did not travel abroad in the 1960s for their college education, trapped as they were by the Cultural Revolution so it’s hardly a surpise that these homebodies have proven reticent to step out internationally. But that’s changing as China’s fifth generation leaders-in-waiting step into senior position of power. Starting the late 1970’s, many of them were educated right here in the U.S.- the birthplace of today’s market-driven globalization. All but penciled in for future top slots last fall at the Communist Party’s supreme gathering, this group has already begun its years-long transition to rule, slated to begin officially in 2012. Increasingly, China’s next leadership generation speaks openly of the nation’s achievement of great power status.. How America, and American businessmen, engages China’s emerging elite in coming years could well determine –for good or ill- the lasting contours of the most important bilateral relationship of the 21st century. Bind America and China together, and globalization cannot be derailed.



Reference material: Thomas P.M. Barnett – policy and foreign affairs expert, author of The Pentagon’s New Map and Blueprint for Action: A Future Worth Creating.

When you think Tanzania, you might think animals, Masai warriors, and being home to Nancy Sumari amidst the many models that make top15 crowned Miss World Africa. Technology might not make your list.




But for the last ten years, Tanzania has made considerable strides and is one of the becons in Africa when it comes to IT and telecoms. Yes, particularly in telecoms. Currently Tanzania is 2nd country in Africa, and amongst a handful in the world to commercially have 3.5 G HSDPA (working on 4G). It also still amazes many that wifi, and other latest technologies happen to be available where they probably last expected it. Src: Tanzania Gateway



The telecom industry in Tanzanian has utilized unparalleled experience in state-of-the-art technologies along with dedicated personalized service that is revolutionizing the way the world thinks of Africa as we know it.


Did you know, Tanzania has one the fastest mobile subscriber growth and mobile penetration rates in the world? Today its amongst the success stories as it has seen its mobile subscribers more than double to 6.5 million from being under 3 million in 2005. Leaving a huge potential for this vast ' early-adaptors-of-new technologies' market. Evidencing this is the fact that even your local fisherman might most likely have a 3G phone.


Not only does it boast connectivity to two key milestones in information technology in Africa, the Eastern Africa Submarine Cable System (EASSy) considered a milestone in the development of information infrastructure in Africa via the high latest fibre optic system connecting Africa to the rest of the world and the Africa One Network.


The later also known as the "One Network," is the world's first bordeless mobile network. Operated via Celtel, it is expected to offer cellular subscribers over the entire continent of Africa and the Middle East ]the ability to move freely within the continents while receiving free incoming calls, and enjoy local rates on making calls and sms services (without changing sim cards). Src: Developing Telecoms


Being first of its kind to the world, the network is expected to play an important role developing the continents economy, considerably boosting cross-border trade, and uniting Africa.


The borderless network was first made available to Tanzania, Uganda, Kenya, and Uganda on September27, 2006. Dar-es-salaam, Nairobi, and Kampala network subscribers were amongst the cities that initially enjoyed this world status which soon expanded coast to coast country wide in each of the three respective nations.


However, Celtel is amongst only a handful or other telecom giants in the 39 million nation such as Vodacom (VOD.L - Vodaphone's brand), and Millicom International Cellular (MICC.O).


Seeing such steps, in addition to its abundant fluent english talent, specifically in its capital, Dar, the nation is positioning itself to be the business process outsourcing hub in Africa to support its booming telecom sector.


Sources:


Reuters - http://www.reuters.com/article/technology-media-telco-SP/idUSL2354470820070123

Developing Telecoms - http://www.developingtelecoms.com/content/view/1076/26/

Tanzania Gateway- http://www.tanzaniagateway.org/docs/Vodacom3GLaunch.asp