Hidden IT Dragons

The concept of Hidden Dragons is very interesting when considering the IT Industry. Many places, like India and China, who have traditionally be operating in more of support/maintenance role are now beginning to transition to more primary service type of work. Global IT companies that only provided maintenance development and quality assurance work, are now not only doing primary development for other companies, but starting to build large businesses with their own product lines and innovating their own software products.

This is beginning to change the industry in several ways. One primary way relates to the pay standards for these other countries. When HP first started using India for offshore solutions they were getting 5 Indian workers for the cost of 1 American Worker. Now that India has discovered that they can make significant amounts of money, their prices have gone up. So much so that HP for example outsourced to China instead where the labor and material costs are back down to the 5 to 1 ratio.

These Hidden Dragons are being built on the "savings" of large American and European companies. Strangely enough, as these foreign companies are doing this work, they're building competence and expertise in many areas that they previously didn't have. As the foreign companies gain this intellectual knowledge and operational capability to deliver (all at the expense of someone else's R&D dollars and experts), they are growing and silently becoming huge competitors. This raises questions around how and when these Dragons will rear their heads and what the results will be on the global market and in the local markets they previously have served. In fact many companies have lost so much intellectual capability to these Hidden Dragons, it has actually led to their decline (speaking from experience at HP).

Hopefully as businesses become more global, the standard of living for workers, the reduction of corruption, and the opportunity for innovation will significantly increase.