As part of the Big Bad Recruiting Blog Swap, today's post is brought to you by Frank Mulligan of Talent Software in China. This is interesting to read, especially after Gautam's post yesterday discussing whether software companies in India should focus on services or products. Enjoy...

One of the most commonly made comparisons in this part of the world is between India and China. It's as if there were actually a race with a defined start and finish line. Everyone explores the issue of who will win, the rabbit or the hare.

China, we are told, has raced off into the lead with a strong FDI model. India, with its stronger base of indigenous technology companies, might be the first past the post of this marathon.

Overall Race Report - Odds on favorite leading, long shot making a surge from the back.

But one area where India is already in the lead is software offshoring. There has been some recent movement in China, but India is easily 20 years ahead. The Chinese government is heavily backing efforts to create a local offshoring industry. Given the lack of success of government bureacrats in choosing favored industries this is not something to crow about. Nevertheless, the support is there and the first steps have been taken.

Over the past few years these efforts have begun to yield results. A recent government push for outsourcing is likely to accelerate this.

As with many other previous industry expansions, China doesn't have the burden of installed legacy technology. It has skipped many of the stages that many others went through. In terms of the PC business you could just as easily talk to the wall as mention CP/M, MS-DOS, or the IBM XT to a programmer in China. The current generation talks in terms of Software As A Service, Web 2.0 and MSN Spaces.

This leapfrogging has allowed companies to start software centres from scratch very quickly. There are quite a few software centres in China now and some have in excess of 1000 programmers. 'Ha, we can beat that easily', says Gautam Ghosh, and he would be right (had he actually said it).

There are, of course, a lot of barriers that have to be overcome if China is going to succeed.

The first and most obvious shortcoming of China is a total lack of experience in running software centres with hundreds, if not thousands, of developers. Systems, procedures, standards and workflows all have to build from scratch. The Capability Maturity Model (CMM) is the perfect example. Only 3-5 years ago there wasn't so much as one company with a Level 1 certification in China. Now many have Level 4 and there are a few companies, such as Bleum here in Shanghai, who have been accredited to Level 5.

At the same time as multinational companies like HP or Microsoft build their software development footprints in China, Indian companies are also active. They have the advantage of a deep knowledge of what it takes to deliver English-language software cheaply, and with quality. Chinese programmers offer them an 'in' to the character-based language markets in Korea, Japan, Hong Kong, and of course China itself.

So maybe the final result will be a win for Indian offshoring companies in China. They bring in international clients, well-defined procedures, developed standard and systems, and many years working at CMM Level 5. China kickstarts its software offshoring industry and India gets a new source of IT skills.

Final Software Offshoring Result:

• China - Winner
• India - Winner