Wednesday, April 05, 2006

Strike the IP red flag for outsourcing software development in China?

Guiseppe de Filippo, associate principal with McKinsey's Shanghai office, and Chris Ip principal in the Hong Kong office, wrote for CIOthe article ‘Leaks in the Great Wall’ Now that India is becoming more expensive, software developers turn ot China. What are the risks?

Productivity and entertainment software is off limits (it’s too easy to copy), but according to the writers there is not much IP theft when Chinese developers were involved. One of the reasons is that the work is done for the Japanese market, “which splits the source-code development across many vendors so that no one vendor has access to the complete code.”
But software that is customized is difficult to replicate too.

Why does the bad perception comes from?
McKinsey China Software Industry Survey, which surveyed the top 100 software companies in China, showed that 60 percent of the executives interviewed were sympathetic toward local customers' propensity to use pirated software developed by foreign companies. China tends to deal more harshly with stolen software sold to foreign entities than with software sold domestically.

How to prevent copyright theft?
One multinational with a development centre in Hangzhou uses diskless computers on a closed network with no external connection and no printers. Access to the centre is strictly controlled, and programmers may only download or upload data or code from the central server under strict supervision.

For more advice read the article here.

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