India, China and Outsourcing

First of all, let us first define what we mean by outsourcing. Outsourcing is getting your work done by someone else who can do it in a cheaper and better way. Now when it comes to outsourcing, the first geographical location that hits our minds is India. India, which has traditionally attracted most of the services outsourcing projects, is currently churning out engineers at the rate of approximately 4 lacs per year which comprises the majority of its skilled workforce. If we are talking about Asia another destination that has caught the attention of everyone is China. China is considered to be the hub of manufacturing. China’s economy is the second largest in the world after United States when measured on the Purchase Power Parity. With the growing influence of China on the world stage, it is considered to be the next IT destination but there are some of the factors that stand against the country and give India an edge.

The key factors that are worth mentioning when we talk of offshoring are:
1. Abundance of technically skillful labor force.
2. Low cost workforce.
3. Quality of service.
4. Regulatory environment.
5. Robustness of infrastructure.
6. Knowledge of English language.
7. Time zone attractiveness.

Now India has tremendous advantage in terms of these factors. Not only that, since India has been doing well on the offshoring front, it has got the knowledge of how the projects are handled and it can use this knowledge as well as experience in taking an active part in the designing stages of the new projects. Another important aspect is the emergence of KPOs where India with its intellectual capital can show its capability in areas like research, designing etc. This is something that China does not own. China is relatively new to this kind of situation. Moreover, China lacks on account of English skills, Mandarin being the local language, and western business practices. But there are some factors that favor the rise of China and they are:
1. Liberalization of Government Regulations.
2. Growing middle class.
3. Large-scale investments in technical education.
4. Vibrant economy.
5. Availability of cheap labor force.

Chinese, over the years, have shown themselves to be hard working, competitive, and dedicated, as a result of which they are able to overcome any odds by dint of labor. China’s Government on the other hand has chalked out a massive program on primary education with focus on training in English. So if we see the overall picture we can be very sure that China can definitely prove to be a threat to India in the near future and India must raise the bar in terms of providing quality services to maintain the current trend in offshoring.