1. IT Outsourcing Opportunities in US and China
Shui Yee Lee, PhD., AT&T Fellow
Chairman & CEO of YES
Retired AT&T Vice President
Commissioner of NJ Science & Technology
Member of District Export Council
May 18, 2006

2. IT Outsourcing Opportunities:
Company Perception on Outsourcing
Advantages and problems
Outsourcing Business Opportunities
Worldwide and US
Industry
Outsourcing Market Share Leaders
Countries
Example
How to Position China be the Market Share Leader
Improve Skill Sets
Eliminate Language Barriers
Job Opportunities in US and China

3. Company Perceptions On Outsourcing
Perceived advantages
Critical success factors
Perceived problems
Skills
Staffing
Quality level
Cost reduction
technical education
Systems may not meet requirement
Depth of skilled resources
in most technology areas
Language and communication barriers
Level 5 CCM ratings
Security and control
Higher productivity,
24-hour global projects
Concerns about potential
social turmoil
Work Environment
High support and phone
costs
> 50% savings

4. Worldwide IT Outsourcing Revenues by Region, 2003 - 2008 ($M)
IDC forecasts continued growth in the worldwide market for IT outsourcing, with a five-year CAGR from 2003 to 2008 of 6.8%. Regionally, EMEA
shows the strongest growth, at 8% for the five-year forecast period, though it will be trailed closely by Asia/Pacific with a 7.7% growth rate for this same period. Essentially, all regions of the world are providing ample opportunities for outsourcers.

5. U. S. IT Outsourcing Revenues, 2003 - 2008
The United States remains the most mature market in the world for IT outsourcing
spending, garnering approximately 43% of the worldwide market in As Table 4
highlights, IDC estimates that the five-year CAGR for the U.S. IT outsourcing market
will be 5.3%.

6. U.S. IT Outsourcing Spending Share by Vertical Industry, 2003
This chart highlights the fact that discrete manufacturing, banking, and government
collectively held more than 45% of the total U.S. IT outsourcing market in As
the forecast shows, these same industries will continue to dominate over the next five
years.
Source: IDC, 2004

7. Outsourcing Market Share Leaders by Countries
India
Brazil, Ireland, Canada, Israel
Germany, Russia, China, Vietnam, Malaysia
India hope to earn $50 billion from IT outsourcing alone by 2008

8. Example: Wipro’s Outsourcing development model (Revenue US $1
Example: Wipro’s Outsourcing development model (Revenue US $1.2B, Growth of employee : 500 – 55,000 < 10 years)
Quality
CMM Level 5, Six Sigma, ISO 9001, PCMM level 5
15,000+ employees trained in Six Sigma methodologies
Processes
Veloci-Q, iPat, K-Net, Cocoon
People
66% university graduates, 29% hold masters, 5% Doctorates
4,000 consultants spread across North America, Europe and Japan
4,500 consultants continuously on the move
Infrastructure
2,350,000+ sq. ft. of development facilities in 21 locations in India
8 near shore development centers
Certified in BS 7799 (2002) security standards
Offshore centers declared 'restricted access'
Alliances
100+ alliances across products and services

9. Growth of China’s software and IT service market far outpaced the growth of global market
CAGR
Unit: $billion
03-07 Global IT Market Forecast
1122
Total
6.5%
1055
987
871
923
Hardware
5.3%
Software
7.6%
Service
7.1%
CAGR
Unit: $billion
03-07 China IT Market Forecast
44.4
Total
15.5%
39.2
34.1
29.4
Hardware
11% 25
Software
23.5%
Service
26.3%
Data source: IDC

10. China is well poised to be the next outsourcing center after India
95-02 China’s GDP grows at 7.9% annually vs. 5.5% for India
95-01 China’s IT investment is more than 3 times of India’s
95-02 China’s total scientists and engineers are more than 3 times of India’s
In 2002 China’s IT infrastructure coverage far outpaced India’s
Additional facts:
China has over 350,000 science and engineers graduating each year, versus about 190,000 for India and 70,000 for the US.
China’s software developer and engineer’s cost is about 1/8 of those in the US, and 15-20% less of those in India.

11. China’s outsourcing market share is small but it grows at much faster rate
Global Outsourcing Market Share
Global outsourcing market is growing at 29.2%
Japan
10%
Europe &
rest
45% US
In 2003, China gets 60% of its outsourcing revenue from Japan
China’s outsourcing revenue will grow at 44.2% annually in the next 5 years
China Outsourcing Revenue Break-down
Rest
15%
Japan
60%
Europe
10% US
Data source: IDC

12. How to Position China to be the Outsourcing Market Leader
Improve Software Development Skill
Project Management
Requirement Engineering
Project Estimation and CMMI process
Large Systems Development & Systems Integration
Practical Training
Eliminate Language Barriers
Control Customer Interfaces with Only Excellent English Speaking Resources
Use Excellent English Speaking Resources to Perform Project Management
Increase Number of English Speaking Employees on Projects
Improve Communication Skill

13. ‘Anyshore’ Delivery Solutions – Global Delivery Model – An Example
US Client’s Staff
10%
YES
Offshore 60%
Program Project Mgmt
Architecture & Planning
Software Development
Systems Design
Testing
Production Support
Maintenance
7 x 24 Coverage
Help Desk
User Specs.
RFP
Review Mgmt
Funding Decisions
Client’s Projects
Feedback Status
Change Requests
Planning
Report
Review
Meeting
Document
YES
Onshore 30%
Client
Dev. Project Mgmt
System Requirement
Systems Migration & Planning
Resource Planning
VISA Admin.
Training

14. IT Job Opportunities in US and China
User Specifications, RFP and Review
Program Management
Architecture and Planning
Systems Requirement
Systems Migration and Planning
System Integration and User Acceptance Testing
Release Management
In China
Project Management
Software Development and Design
Testing
Production Support and Help Desk
Maintenance

15. Thank You !