Will China dominate outsourcing’s future?
China has begun to figure as an alternative for the practice of shipping tech tasks offshore after India’s run of stunning good fortune.
One advantage is that China has a large labor supply pool like India and the other one is that if you’re dealing with customers or companies who have an Asian headquarters, there is a language and cultural advantage in China. Particularly in cities like Shanghai, which has bilingual engineers who speak both Japanese and Chinese. China is associated with low cost, at least in the software industry.
The shift has not gone unnoticed by leading technology outsourcers in India, who are dealing with creeping wage inflation. As a result, some are fast establishing a presence in China to remain competitive with their peers.
How big this trend will become remains unclear. Revenue from IT services is rising in China, but it is still barely half of India’s $12.7 billion a year, according to a recent report from consulting firm McKinsey.
There are both advantages and disadvantages in China right now. One is the intellectual-property protection issue. The second is their English language capability, and the third is their lack of project management expertise. According to McKinsey, China faces other challenges, not the least of which is a lack of management talent.
The challenge in China is only in the project management area–project lead area or the specialized consultant area. But at the grassroots level, the attitude as well as the ability to do hard work and the quality of output–all that is very good.
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