- The business value of Information Security (23 February 2010, CIOL)
- Facebook deemed world’s most innovative company (23 February 2010, Business and Leadership)
- 3 tools to improve collaboration in your company (24 February 2010, Infoworld)
- Compliance Under a Cloud (25 February 2010, CIO)
- Cloud computing and its relevance in India (25 February 2010, CIOL)
- Recession shifts IT service management into fast lane (25 February 2010, Computerworld)
- Study: Most multinational companies use IT outsourcing (25 February 2010, IT World Canada)
- Offshoring: Should the government send IT work abroad? (24 February 2010, Silicon)
- Computerwoche-Anwenderstudie Teil 1: So planen IT-Entscheider 2010 (01 March 2010, Computerwoche)
- Deloitte-Studie: Was IT-Dienstleister gegen Umsatzeinbrüche tun (24 February 2010, CIO)
- CeBIT 2010: Was dieses Jahr alles anders werden soll (22 February 2010, ZDNet)

- IT spending in western Europe to reach US$68.6bn (09 February 2010, Business and Leadership)
- IT Outsourcing: Why It Pays to Appraise Your Contract (09 February 2010, CIO)
- Global IT industry to return to growth this year (09 February 2010, Computing)
- Japan remains world’s No 2 economy (15 February 2010, Business and Leadership)
- Silicon Valley limps as India dashes ahead (12 February 2010, CIOL)
- What matters for the IT industry in 2010? (12 February 2010, Computer Weekly)
- Indian IT firms turn to Latin America: WSJ (11 February 2010, CIOL)
- Offshoring Research and Development set for growth (10 February 2010, Offshoring Times)
- Der Open-Source-Fahrplan für die CeBIT (12 February 2010, Silicon)
- IT-Branche wieder optimistisch (12 February 2010, CRN)
- Der deutsche IT-Markt erholt sich langsam (10 February 2010, CIO)

- IT industry fights tax changes (02 February 2010, Misaustralia)
- India Telecom outlook for 2010 is stable to negative (02 February 2010, CIOL)
- Asset Protection Offshore! (03 February 2010, PR Inside)
- Cairo ICT to reflect dynamism of the IT sector (08 February 2010, Yahoo News)
- IT recovery on, India ranks high (03 February 2010, Yahoo News)
- How will the Carbon Reduction Committment affect IT outsourcing? (03 February 2010, Computerweekly)
- IT Outsourcing: Why It Pays to Appraise Your Contract (03 February 2010, CIO)
- 10 best IT jobs right now: Source: The Industry Standard (02 February 2010, The Standard)
- Rumänien: Der Lockruf des Karpaten-Goldes (03 February 2010, Die Presse)
- Russland nach der Krise: Wütende Bürger trotz Wirtschaftsaufschwung (02 February 2010, Handelsblatt)
- Europäischer Outsourcing-Markt stark gewachsen (05 February 2010, Inside IT)
- Deutsche Sprache – schwere Sprache: Neulich in …Bangalore (03 February 2010, Computerwoche)

- Deloitte outlines priorities for CIOs in year ahead (26 January 2010, Computing)
- Economic rebound will drive demand for ICT (28 January 2010, Voice and Data)
- No slowdown for IT jobs: Candle ICT (1 February 2010, itnews)
- A Big Year for ‘Socialytic’ Applications? (29 January 2010, CIO)
- Is 2010 the year of location-based services? (29 January 2010, CIO)
- Moldova: A Corner of Potential in Europe (27 January 2010, BusinessWeek)
- Predicting the role of outsourcing in 2010 (26 January 2010, Financial Director)
- Can outsourcing and cloud save stretched IT departments? (25 January 2010, Silicon.com)
- Moving forward in OpenSource (25 January 2010, CIOL)
- Messemacher diskutieren Perspektiven von CeBIT & Co (1 February 2010, Computerwoche)
- Energieverbrauch, Outsourcing: Gartner blickt in die IT-Glaskugel (29 January 2010, CIO)
- Forrester-Ranking: Deutscher IT-Markt legt 2010 um elf Prozent zu (29 January 2010, CIO)
- Die Hälfte der Schweizer Firmen nutzt SaaS (29 January 2010, Swiss IT Magazine)

- IT to go outside IT department, says Gartner (18 January 2010, Computing)
- Europeans say “ditch Internet Explorer” (18 January 2010, Computing)
- Internet video and Apps on TV soon (19 January 2010, CIOL)
- Open source under threat from ‘grey’ IP laws (21 January 2010, CIO)
- IT management shake-ups sweep finance sector (20 January 2010, Computing)
- Global IT industry to return to growth in 2010 (21 January 2010, Computing)
- The Future of IT Application Architectures (22 January 2010, CIO)
- Outsourcing: Crippling Mistakes IT Departments Make (25 January 2010, CIO)
- India’s top outsourcing companies hiring and increasing wages (21 January 2010, Monterey Herald)
- US Universities increase interest in outsourcing (19 January 2010, Sourcing Focus)
- Nielsen-Zahlen: Werbung im Internet nimmt kräftig zu (19 January 2010, Computerwoche)
- Der lange Weg zum Komplettanbieter: Kampf der IT-Titanen (25 January 2010, Computerwoche)
- Was CIOs vor Cloud Computing abschreckt (22 January 2010, CIO)
- Arbeitsmarkt: Krise erwischt auch Informatikabsolventen (22 January 2010, Computerwoche)
- “2010 wird kein einfaches Jahr für uns” (19 January 2010, Silicon)
- CH-Unternehmen nutzen Social Media kaum (19 January 2010, Swiss IT Magazine)

After the trip in India that Frédéric and Alexandra made at the beginning of November, they will be traveling to Russia for an on-site study of the possible destinations that could accommodate a new entity of the Pentalog group.

As before, the aim is to make an assessment of the country’s ability to serve clients in computing, including embedded, in the following sectors: aerospace, defense, automotive. They always keep in mind the question of the Francophone, so we invite all Russian engineers, emigrates and entrepreneurs Francophone who read this text to contact us.

They have not yet made a final decision about cities to visit. After a quick stop in Perm, they must decide between Moscow, St. Petersburg and Novosibirsk.

The trip will take place from January 21st to 28th. Don’t hesitate to contact us if you think you can play a role in our project.

- 10 Outsourcing Trends to Watch in 2010 (17 December 2009, Outsourcing Russia)
- 6 Offshore Outsourcing Hot Spots for 2010 (22 December 2009, CIO)
- Tunisian economy resists world financial and economic crisis (26 December 2009, Tunis-Afrique Presse)
- India helps Mongolia in IT outsourcing (28 December 2009, CIOL)
- Five big questions about cloud computing (22 December 2009, InfoWorld)
- Today Linux is no more an option, it is a necessity (24 December 2009, CIOL)
- The top underreported tech stories of 2009 (28 December 2009, InfoWorld)
- IT-Krise war gar nicht so schlimm (22 December 2009, Netzeitung)
- Datensicherheit, Nutzen, Offhoring: Outsourcing-Projekte in Deutschland (22 December 2009, CIO)
- Deutsche und Inder forschen zusammen (23 December 2009, Silicon)
- Offshoring soll wachsen: Die Outsourcing-Trends 2010 (23 December 2009, CIO)
- Ausblick 2010: neue Chancen und Aufgaben der IT (28 December 2009, ZDNet)

- Orange, Twitter sign European partnership – tweets by SMS just the start, Twitter on TV could follow (17 November 2009, Techcrunch)
- Bharti Airtel launches far-east connect network (17 November 2009, CIOL)
- Burda buys 25% stake in XING (18 November 2009, Techcrunch)
- Social network sites criticized on bullying (18 November 2009, CNN)
- The Next War Over IT (16 November 2009, Forbes)
- CIOs fear mass IT exodus following economic recovery (18 November 2009, Computerworld)
- Cost-Saving Secrets of the Outsourcing Insiders (18 November2009, Computerworld)
- Billiganbieter in der Kritik: Unzufriedene Kunden setzen Offshorern zu (19 November 2009, Computerwoche)
- Zukunft der IT: Alles Service – oder was? (19 November 2009, Computerwoche)

After a 10 day trip through India, visiting 2 states and 3 cities, in full monsoon season, I can say the experience was very rich, both personally and professionally… where to start? Maybe by thanking all the people we met there, who demonstrated a great sense of hospitality towards us. We met people from small companies, big companies, self-employed, employees, expatriates, teachers… we were always well received, we talked openly about their country, fascinating and so full of contradictions, these conversations provided the keys to better understand their culture and history. Special thanks to Prashant for the foray into the nightlife of Chennai, and Bhagath for having taken us into this open air museum! Too bad we did not have more time to enjoy it. Well, maybe we will come back! In any case, I will not miss neither the air conditioning nor the curry for some time and we will not talk about the traffic jams and the pollution of Bangalore. This I am not ready to forget!

What first struck me when I arrived in India was the dilapidated state of its cities, whose population is growing faster than infrastructure can adapt. We had only the time to visit 2 large cities (Chennai and Bangalore, Pondicherry having less than one million inhabitants), but this seems to be also the case in New Delhi, Calcutta and Mumbai, according to what we heard. Indeed, as Fred pointed out, it gives a certain idea on the country’s ability to move quickly and improve its overall quality of life. Even in Bangalore, where when we left the airport and drove towards the city center, we remarked “what a nice highway,” and then we quickly saw cows grazing on piles of garbage on sidewalks and makeshift camps next door to the college campuses, and where high tech businesses worked in neighborhoods alongside the poverty of the streets.

The central question about the availability of human resources from both a technical and linguistic point of view, proved to be more difficult than what I had anticipated. Even in Pondicherry, the IT students who learn French are very rare… less than 5% at the Pondicherry Engineering College that we visited. The network of the Alliances Francaises and Campus France are very present and active throughout the country, but ultimately, there are only a few hundred Indian IT students who study in France each year and how many of them in the areas that interest us the most? the number must be ridiculous. We encountered a major IT player in the Indian avionics sector in Chennai and they estimated that only 1% of their 1500 embedded engineers in their sector are francophone. They took the gamble of language training with the Alliance Francaise in order to expand their operations in France. It’s a long term investment… And as suggested by an Indian entrepreneur we met in Bangalore, requesting an aeronautical IT engineer to spend time learning a foreign language, to the detriment of his technical progress in his profession, may have him leave the company. There is also the solution to employ translators who would work alongside the engineers but I am well placed to know that translating is not easy neither, especially when dealing with subjects on such a high level of criticality and sophistication, even using translation automation tools. Apparently some big companies do, so it must work at least partially so, however, I remain skeptical!

On the technical side, throughout India, there are many of the experts that we were looking for. There are maybe 15 000 in the country. But these people want to work for big name companies, directly for the end customer, and are loyal employees when they work on high-level projects. We heard about the average attrition rate of 20% in India, and when talking about the companies in embedded aeronautics, one comes up with a figure of around 8%. It will definitely not be easy to recruit.

But besides all these difficulties which we have clearly understood, there is no doubt that the Indians also know how to demonstrate their seriousness and maturity in the offshore business. From the meetings that we held, it suggested to me that there really is something to do there. Several times we were told, “Everything’s possible in India” and I sincerely believe this. Nevertheless, the investments that should be deemed essential in building something solid in India would certainly be more costly and the process, more complex than in our previous locations.

Well, I have tried to be concise and pragmatic; I could continue to write pages on this subject. The findings of this first trip are not so obvious. For now, a study needs to be conducted on Pentalog’s objectives and the means to implement a possible venture in India. Maybe we’ll soon have the opportunity to make a 2nd trip to India, to deepen our understanding of the possibilities in this country. I think we should at least visit 2 more cities in order to have a better perspective. Coimbatore and Hyderabad were often mentioned as interesting in the exchanges we had… In any case, if we launch and manage the challenge, it would be quite a performance and it would be the icing on the cake for Pentalog’s offshore business.

Here are a few pictures I brought back. Including my favorites here:

Pondicherry: near the Indian Ocean

In the streets of Pondicherry

On the road to Chennai

Bangalore

- inCode’s Top 10 Telecom predictions for 2010 (10 november 2009, CIOL)
- Xing grows revenue while profit falls – and no LinkedIn takeover likely (13 november 2009, Techcrunch)
- What Matters Most in Outsourcing: Outcomes vs. Tasks (16 november 2009, CIO)
- Why are Indian outsourcing companies such bashful suitors? (6 november 2009, Silicon)
- The Global Innovation Migration (9 november 2009, Business Week)
- Outsourcing on the rise (10 november 2009, Global Times)
- Europäische ITK-Markt blickt optimistisch in die Zukunft (9 november 2009, Silicon.de)
- Europas 100 größte Softwarefirmen (10 november 2009, ZDNet.de)
- Outsourcing: Deutsche Konzerne lockt die Ferne (11 november 2009, Silicon.de)
- Mieten statt Leasen, Outsourcing statt Eigenleistung: Warum klassische TK-Anlagen out sind (16 november 2009, Computerwoche)

- The Other Side Of Outsourcing (02 novembere 2009, Forbes)
- Technology doesn’t isolate people: U.S. study The survey was sparked by a 2006 study (06 november 2009, CIOL)
- Industry to develop cloud computing code of conduct (04 november 2009, itnews)
- Indian outsourcing companies eyes Latin America (04 november 2009, Offshoring Times)
- The next step for Twitter Lists — Entire countries (4 november 2009, Techcrunch)
- Anwender kennen ihre Sourcing-Kosten nicht (02 november 2009, computerwoche)
- Outsourcing-Umsätze in Europa fast halbiert (02 november 2009, CIO)
- Wie sieht die IT nach der Krise aus? (02 november 2009, computerwoche)
- IT-Nachwuchs will weg aus Deutschland (05 november 2009, CIO)

It’s been five days since I’ve arrived in the state of Tamilnadu in this Indian federation. Four days and not a single article on the Pentablog. Amazing isn’t it? I will simply say, for convenience, that our schedule does not leave me much time. But I would not be totally honest! No, this India of so many savors and flavors, with such violent contrasts, the constant monsoons, this India is giving me no respite, and spreads before me so many pitfalls that I am having a difficult time to form a clear picture.

Is there only one India which regroups all these universities, which, like the one in Chennai, that Alexandra and I visited which is sending its own satellite into space, the same one which is defining an ambitious nuclear program to meet the needs of its population in electricity? This country which has all the features of a third world country that should be considered unacceptable; people huddled by the dozens in a sheltered corners, to sleep, or the garlands of garbage that stretch endlessly along the streets.

When it comes to emerging countries, the term “a two-tiered society” always comes back to haunt us. It seems more applicable than ever in India and we go directly from first gear to fifth. Between these two, nothing. Nothing? Probably not, because IT employees are here, bank employees and telecom operators as well. But what exactly do they represent in this population of one billion Indians? Will they become, as in so many other emerging countries, a political force, a middle class?

It’s Sunday today, I spent a very pleasant time with Jean Michel, a consultant in Pondicherry for French companies, with Cyril, Tamara and their daughters Natasha and Cloe I thank them for their warm reception and the informative conversation that we had. I will also try, in the coming days to explain further the activities of Cyril.

What we have seen confirms that India is multifaceted. No, it is downright plural. The potential of the local market is incredible to the Western mind because 10% of India acceding to this middle class represent the combined population of France and Germany.

For offshore … I do not know yet when I can publish this article because of the WIFI of our resort, beside the Indian Ocean does not work, but how lucky we are and we have yet to see Bangalore! But you must know my Indian friends, who welcomed us with such kindness and openness what the companies that we visited had to say about you. I am not here to denounce anyone; On the contrary I am simply here to develop our relationship. From the largest to the smallest, they do not hesitate to criticize your level of productivity; they talk of “3 French people for one Indian”. The quality of the technical training was often, also questioned. You must understand this, to further improve your services.

And my fellow compatriots, do you invest enough in your strategies to reduce costs? Invest in reducing costs?? Isn’t this, after all, the whole history of industry? Reduce costs, increase quality, by investing in machinery, in methodology and organization? How can it be otherwise when you speak so often of the industrialization of your services? I see here so few investing “really” in training and coaching. Few amongst you are investing in language training, coaching, or transferring qualified personnel, already qualified for offshore operations; when you talk about India, like everyone, and you are the first to acknowledge the complexity of the situation. All those who do not recognize themselves here please forgive me, because I have yet to meet you.

Jean-Michel, coming from a different profession, spoke in counterpoint, of the case of Louis Vuitton, which has invested heavily in training and today is reaping the fruits of their efforts. Their success is not a question of luck!

The more a country is complex; more it is difficult to understand, more it should be approached with a certain pragmatism. I believe that to succeed in India, in a relationship with France, we must begin by admitting that in general, Indian employees will not face those who speak the best English in the world, but Indians themselves do not necessarily speak good English. We must also learn, perhaps, from what we see everywhere in the country. A beautiful and finished product does not exist. I have experienced this elsewhere in another country that I love and where Pentalog is on the national podium for outsourcing and IT consulting. It is up to the Indians and their Western partners to seize these perpetual questions of quality, tangible and understandable, and put them in perspective with the incomprehension and dismay that I find myself today, in order to perhaps begin to understand and articulate the challenges together.

If, while reading this note you did understand, then I really must not have articulated myself well enough.

Pondicherry, November 9 at 6 a.m.

Following our preceding posts (which you can read here and there), I just want to add a few new details to our program. I want to thank again all those who have already contacted us about this, and who have commented on our posts on this blog or social networks.

The project has since then, been clarified a little more… Subject to last minute changes, Fred and I should be:
- in Chennai on 05 and 06/11,
- then on to Pondicherry on the weekend of the 07-08/11,
- then up to Bangalore on 09 and 10/11.

Maybe, we will also get to Mumbai or elsewhere, there are so many interesting places, we unfortunately had to make a choice. We can not meet all the people who have expressed an interest in the project notes. That said, we shall certainly deepen our study and then have the opportunity to travel to other cities.

Those interested in meeting with us and are available on those dates and locations listed above, can contact me directly by email. We have already identified a few potential partners and want to meet as many candidates as possible: young project managers and entrepreneurs, technical experts in the areas of interest (embedded systems), but also academics, students and teachers who can help us assess the level of technical expertise and the level of French in the cities where we shall be going. People working in R&D centers and other special schools (IT and avionics sectors) will also be a part of our research target.

So much for the latest details. The next post on this subject will certainly be published just before our departure. Therefore keep following us…

- Deutschland: Konjunktur springt langsam wieder an (15 October 2009, DiePresse.com)
- Outsourcing: Krise nährt die Krise (15 October 2009, Computer Reseller News)
- IT-Service-Unternehmen rechnen mit einstelligem Marktwachstum (15 October 2009, Silicon.de)
- YouTube Monetizing Over A Billion Video Views A Week (15 October 2009, TechCrunch)
- SocGen to Increase IT Offshoring in India (14 October 2009, BusinessWeek)
- America’s 200 Best Small Companies Of 2009 (14 October 2009, Forbes)
- China and India Business Grows as Border Dispute Flares (14 October 2009, BusinessWeek)
- Studie: Weniger Outsourcing in Deutschland (12 October 2009, Computer Reseller News)
- Indian Outsourcing Companies Look for New Markets (12 October 2009, BusinessWeek)
- Agile Softwareentwicklung- Mehr Erfolg durch Flexibilität (12 October 2009, Computerwoche)
- Third party maintenance contracts on the rise (12 October 2009, Offshoring Times)

- Gartner: flat IT budgets, but get ready for growth (08 October 2009, ComputerWeekly.com)
- Indian IT mid-cap firms to post mixed Q2 results (08 October 2009, CIOL)
- Deutsche Unis in weltweitem Ranking abgeschlagen (08 October 2009, Financial Times Deutschland)
- 60% of outsourcing firms hiring more this year: Survey (07 October 2009, Sourcingmag.com)
- How To Deal With Corruption In China (07 October 2009, Forbes)
- Mehr Intelligenz fürs Software-Outsourcing (07 October 2009, Silicon.de)
- Study: 54% of companies ban Facebook, Twitter at work (06 October 2009, Computerworld)
- Bulgaria Gets Real about Its Economy (06 October 2009, Business Week)
- Indien verliert an Boden im Offshoring-Markt (05 October 2009, CIO)
- China’s Statistical Setback (01 October 2009, Forbes)

- IT professionals fear ‘brain drain’ as UK opportunities dry up (5 October 2009, Computer Weekly)
- India to add more rules in IT Act soon (2 October 2009, CIOL)
- Europe finds flavour with Indian outsourcing (October 2009, Offshoring Times)
- China’s Online Censors Work Overtime (30 September 2009, Business Week)
- Germany Benefits from Global Recovery (30 September 2009, Business Week)
- India’s new outsourcing rival–Romania? (11 September 2009, cnet); missed that-one a few weeks before, but it’s very interesting…

Some news…

- Internet: The forty glorious years (25 September 2009, CIOL)
- China zückt politisches Scheckbuch (22 September 2009, Handelsblatt)
- Offshoring geht nur mit Methode (22 September 2009, Computer Zeitung)
- Indian IT firms step up security with paramilitary (21 September 2009, CIOL)
- CFOs unzufrieden mit CIOs: Keiner weiß, was Outsourcing bringt (18 September 2009, CIO)

The details of our trip are becoming clearer, along with how the project will fit into the Pentalog business plan. India could, amongst other things, become within our group the center of expertise for aviation. The skills which have been identified in this country seem promising for this kind of niche; while the offshore needs in this sector have not yet been sufficiently met to date. We have initiated a search, on Linkedin and Viadeo, for managers who might be interested in our project. They can be many things at once; project leaders, management, partners … We are open to all types of experience and we are looking for people with a high degree of personal accomplishment. Where we may seem surprising is that we are looking for even more French speaking people than in Vietnam… Damn! This does not seem to be the place. Ok! I will say a little more. We will look to put together a small cluster of 100 to 200 employees, in which can put the emphasis on languages, in this country where nobody else has managed to do so. Some members of Pentalog, highly experienced in management in emerging markets, technology and in targeted projects will be a part of this adventure, if it materializes. The cities that interest us to date are Mumbai, Bangalore, Chennai (Madras), Delhi. We presently are seeking to bring together all the right conditions. I am getting a little ahead of myself by saying the trip is a sure thing! But if we can succeed with this bet it will make Pentalog the only European company to be 100% in IT, 100% offshore, 100% nearshore, 100% shores!

What’s up?

- Phone calling coming to Twitter (17 September 2009, CNN.com)
- BPO-Markt Deutschland: Umfang der ausgelagerten Aufgaben nimmt zu (16 September 2009, CIO)
- IT soll Finger von Web 2.0 lassen (16 September 2009, CIO)
- How Russia could be more productive (September 2009, Mc Kinsey)
- Infrastructure outsourcing on the rise (15 September 2009, Offshoring Times)
- Outsourcing demand to pick up in H2: NASSCOM (15 September 2009, CIOL)
- Löhne: Arbeitskosten steigen stark (15 September 2009, CIO)
- Finland to set up tech innovation centre in Delhi (11 September 2009, CIOL)

Here are the latest press articles we selected for you:

- Wipro sees pick-up in European business in Q2 (14 September 2009, CIOL)
- Deutsche Telekom Torn In The USA (14 September 2009, Forbes)

And for our German-speaking friends:
- Ausgaben in IT-Innovationen sinken um elf Prozent (08 September 2009, Computerzeitung)
- Unternehmenssoftware, Alle Zahlen stets im Blick (07 September 2009, Capital)
- BPO: Firmen lagern immer komplexere Prozesse aus (07 September 2009, Computerwoche)
- Deutschland fällt bei IT-Kompetenz leicht zurück (03 September 09, Computerzeitung)

A few days ago, I came across an article in the French It Mag commenting about the results of the Indian IT services companies which have been collapsing on a continuous basis since late 2007. Many of them have even registered losses. This information, except in the case of Satyam, still surprised me for the simple reason that the downward trend was even more staggering because these corporations had at one time posted incredibly high returns. Some have even shown 30% EBIT on hundreds of millions. The scarcity of customers in these times of crisis does not seem possible to explain totally this rapid fall.

I see several possibilities:

But anyway, the current drop is not consistent with the declining profits of U.S., Eastern and Western European companies, which share the same customer base. They are not in the process of undergoing a shift from +30% to -10! The most profitables-ones will go from 12% to a balanced financial statement and the worst performers will go from 3% to -5%. In short, the decline in profits will be limited to less than a dozen points.

It remains to be seen whether the dire predictions of this article will be confirmed or not, sweeping aside in the latter case the value of this short note.

In a conversation with one of our JV partners last week we spoke a bit about the geopolitical and strategic nature of offshoring. For a few minutes, we considered the global outsourcing map.

We came to the conclusion that the “Eastern Europe” demand was responding to social and cultural issues and kept both parties between protectionism and competitive relocation.
“Asia” is mostly a matter of cost reduction, when constraints of time shift, flow of goods, people and culture are not obstacles.

I am stating here what has been obvious for years. Besides this simple mapping, which already requires the construction of a complex network of production units in order to be exhaustive, I realize that there are also regions with specialties that are related either to old technological specialization of these countries, or to a perfectly contemporary desire to develop their business portfolio.

Let’s say that among the offshore countries, everybody does business data processing but not all in the same way:

- small countries in Eastern Europe (Slovakia, Czech Republic, the Baltic Countries, Bulgaria, Moldova) are mostly involved in small projects. They are often strong enough to support an innovation process or small maintenances. Few human resources often lead to prohibitive cost levels (except Bulgaria and Moldova).

- large countries in Eastern Europe: Ukraine, Poland, Romania, Russia. They have the power to build project platforms with dozens of collaborators (including more than 50). But they are also involved in small projects. They often have a catalog with important specialties, whether in infrastructure or large applications (SAP, Oracle, BO, ETL …). This allows them to exceed the standard typology of usual offshore development project (Java / Dotnet +1 DB).

- Asian countries inspire us by their ability to upload hundreds of collaborators but worry us because of functional aspects and communication.

In embedded computing it is much more complex because very few countries actually do it when the demand explodes. Choosing a production area in this respect is not easy because the client often requires a high level of expertise. I’m saying EXPERTISE AND NOT JUST EXPERIENCE. This expertise is often acquired by participation in projects in the industrial field of reference for each client.

So where can we make embedded aeronautics? Of course where we build aircrafts: in Russia, a bit in Ukraine and Brazil. But the Indian policy is also starting to be successful, because from now on there are real capabilities. However, be careful, because on this market, membership to NATO may be decisive.

Where can I make embedded telco: where we have been strong in telecom for a long time. In Russia, Romania, India, Poland.

What about automotive? Romania, Poland, Russia… and India.

In conclusion, wanting to offshore or nearshore today, is no longer enough, because the promise of cost reduction does not satiate contractors anymore. Offshore countries had to specialize, to become more professional. Nevertheless, we cannot achieve progress without a thorough analysis of the national logics of competitiveness and excellence, that are developed both on the legacies of the past and on development policies.

In this context an offshore/nearshore player will determine its choices based on the offer he intends to deploy. One has to admit that, to date, only India offers a full specialties chart; Russia is not far behind. On the contrary, both have serious problems when working in too precise areas or when the communication process becomes complex, including, for example, round-trips between client and suppliers, or the understanding of specifications written in other languages than English, many years before offshore outsourcing.

For all these reasons, I conclude that the offshore world is forced to make choices dictated by what I call “geopolitics of service supply”. I don’t know how one can be a complete low cost outsourcer nowadays, without having offices in Europe and Asia. This seems to be the minimum requirement. Yet, several units on both continents may be necessary in order to have a portfolio of specialties that tend to be exhaustive.

I think it is an early analysis of this constraint that allowed Pentalog to dig a gap with its competitors. We have first implemented it at the scale of Romania-Moldova, and later on in Asia. The benchmark hasn’t not finished yet. Romania is not the nearshore of Sweden (we will therefore go to Petersburg and Riga), India requires compensations in engineering when we sell them Airbuses (therefore we will think about India), the explosion of BPO could bring a smile for Morocco… ITO, BPO, EDO, are never-ending stories!

Since a few months now, I have been feeling a great commercial pressure from Indian offshore companies… We knew they were commercially aggressive but now they become harassing. There is no day without me receiving some canvassing emails or phone calls. This reveals some difficulties without a doubt, as highlighted in a recent article published in the IT press, announcing that Gartner expects a slowdown in the growth of offshore business in India… For the first time in its history, Infosys is also expecting to record a drop in sales of about 3 to 6%in 2009.

As an explanation, there are of course the consequences of the global economic crisis: customers tend to decrease the volume of their operations, they seek to renegotiate prices. But before that, and in a general manner, there are also high turnover rates, salary inflation, infrastructure problems, the Satyam scandal, the attack in Mumbai… in short, India’s reputation was hurt lately… This benefits other destinations such as Eastern Europe, Brazil, Vietnam, which appear to increasingly overshadow this giant. It is true that India is “a must” for these very large contracts that require the mobilization of huge resources in record time, but these customers represent only a small percentage of companies looking to outsource development projects today. And for the establishment of teams of 10, 20, 50 or 100 people, there are many alternatives in other countries, quite capable of responding to such a need. Perhaps it will rather be those countries which will benefit from the trend tending to promote outsourcing to low cost countries…

Well, it is clear that India should still keep its offshore leading position for a while. Indeed, in terms of resources, tens of thousands of young engineers in computer science graduate every year from Indian universities. At this level, no other country can compete, not even China, who faces linguistic problems that hinder the development of the country on offshore markets. One needs to pay 10 to 15% more for English-speaking resources there and the key destinations where one can find these rare gems are already saturated. So the prices go up even much faster than in India…

And with their experience, Indians know how to benefit from the rise of other offshore nearshore destinations. Most of the giant Indian companies have subsidiaries in Eastern Europe and they are in the process of settling in Mexico, Brazil.

They will not let the biggest share of the cake be taken away like that!

I asked myself this question last night while I was assessing the situation in Moldova… which has nothing amusing in it. However, I made this reflection, namely that all offshore countries without exception were dictatorships and that nearshore countries were already, almost all, democratic. You may think I satirize, but the following short list gives me reason:

- Nearshore: all countries in Central and Eastern Europe, that are EU members, are democratic; they don’t dislike those who only know what a dictatorship is. Argentina, Chile, Uruguay are nearshore US countries and pose few problems to their inhabitants. In Europe, the exceptions have all the same characteristic; they are the former RSS (Moldova, Belarus, Ukraine). Happiness does not return quickly where the imperialism of Moscow has passed through. The prize goes without doubt to Belarus, which always has a leader of the Cretaceous era (the era of morons?). Morocco is not a democratic country and it is quite possible that France has contributed to this situation. Tunisia is not a democratic country either and wants to play the nearshore card as well.

- Offshore: Madagascar has one for a while now, but is India a democratic country when 80% of its population lives an unspeakable fate that nobody wants to improve? China, Indonesia, Malaysia, my dear Vietnam are not examples of respect for human rights either. Finally, I find no democracy in the offshore area.

So does this mean that democracy is too expensive for our industry? In fact it is not impossible, although simplistic yet. As recently as last week, one of our competitors in human resources in Moldova, wanted the Communists to win the election “so that nothing would change.” I will not give my opinion on the Moldovan election because I’m not legitimate. Indeed, for me, the problem is not that the Communists win or lose this election. The real question is what the regime will be, which, by its policy, will ensure the country’s economic development and respect for basic rights to education, health, vote with respect of democratic procedures. Here are the real issues. I explained to these people, that we, the software companies, would have to pay our payroll taxes, as true corporate citizens, if they were going to ask for fiscal measures for us and our employees.

I then explained what everybody knows, including themselves, that people would leave this type of country for the living conditions rather than for the wage (what most of the time, leaders do not know). I’M REFERING HERE TO OUR BUSINESS ONLY. But this guy refused to understand me and explained the benefit of his wage system, based on the use of a tax heaven to pay its employees. I will return to this topic one day.

I believe that, in fact, it is not democracy that it is costly in itself. Nobody questions the strength of Canadian democracy and yet the work is much cheaper in Luxembourg, Sweden, Germany and even France.

I am not absolutely looking to fall on my feet at the end of this difficult exercise, but I would say that these countries need the revenues that we generate. I would also say that we are demanding companies, in terms of educational and technical infrastructure. Our companies are, by nature, open to the outside world through their customers. I fully felt the emotion of those who shared this difficult week with us. They were interested in what was going on and discussed with the teams. The employees of offshore companies, either Moldovan, Belarusian or Moroccans are often at the democratic forefront of these countries and often share much higher expectations than the rest of the population. We often offer them the only solution to put their knowledge to use while remaining in their country.

In conclusion, I would say that no one, for these reasons, could settle in the worst dictatorships, regardless of the wage cost. Who offshores in North Korea or nearshores in Libya? Thus, the presence of IT offshore activity could be used to measure the degree of hardness of a dictatorship! Isn’t this amazing?