India versus China in the Race of Outsourcing

Why India Scores Over China in the Job Shipping

Over the last 10 years, India has taken the lead in the job shipping industry. Such has been India’s strident march that China, now its closest competitor, is finding it difficult to keep up with India.

The deciding factor that is keeping the Indian elephant’s nose ahead of the Chinese dragon’s is the proficiency that its offshoring service providers enjoy in project management.

Companies such as IBM and Microsoft have stated that for work sent to other countries, India delivers more value than China. Most clients remain impressed with the proven abilities of Indian service providers in executive leadership, employee management, and operational efficiency.

Indian companies, however, can’t take the challenge posed by China lightly. The Chinese government, as part of its 100-year plan for the country, is taking corrective measures. It has formed a blueprint for its job shipping industry to compete with India.

It is spending billions of dollars to build a nationwide infrastructure for 3G in IT. It is reducing red tape by setting up distinct zones to cater solely for companies which ship projects to China. It is preparing itself to become a superpower in providing services in mobile applications–an offshoring field with immense potential.

Given the strong threat it no doubt poses, China has still not been able to put together the business ammunition necessary to consistently take away work to be sent to India.

This is not surprising as experts in the job shipping industry give India the upper hand on the basis of its experienced English-speaking professionals. Furthermore they agree that India still enjoys a cost advantage.

China will also have to fend off India’s leadership position in web technologies, the strength of its domestic economy, and its dynamic democracy to reach a position of pre-eminence in the job shipping sector.

Nevertheless, competition between India and China will lay down the direction that the global job shipping business will take in the next decade. Considering that India’s job shipping industry is projected to earn $175 billion in exports by 2020, it will be a tough one.

India, with its younger population and entrepreneurial strength, has a clear business mandate to build on present strengths for future growth markets.

China lags in job shipping revenue and market share:

By the end of 2009, out of the global revenues in the information technology and BPO market worth $373 billion, India will top the list. It will earn approximately $48 billion, and China will end the year with $28 billion as revenues—almost half of India’s. India would have 44.8 percent of the total pie and China 25.9 percent, according to Canadian-based ICT research and advisory firm XMG Global.

Experts pick India instead of China:

According to US author Robert Kennedy of The Services Shift, a recent book on offshoring, China is unlikely to overtake India in the job shipping sector anytime soon.

Both the International Association of Outsourcing Professionals and A.T. Kearney’s Global Services Location Index 2009 have confirmed India’s superiority in the sector.

Leading economist Sherman Chan has stated that India will remain the top destination for sending jobs. This will be because of its “tech-savvy and English-proficient urban workforce whose wages are much lower than their western counterparts”.

It’s not just experts and authority figures involved in the sector who favor India over China, its China itself which feels inspired from India’s example.

In March 2008, a senior member of the National Committee of the Chinese People’s Political Consultative Conference advised the government to learn from India’s experience in developing a market for jobs sent from western countries.

Some industry executives have even observed that China’s role the job shipping market is diminishing. Reasons cited for disappointing growth included high attrition rates, a lack of English-speaking workers, and inadequate intellectual property laws. In fact, according to one executive sending projects to China, “China would have to be 20 percent cheaper than India to be viable.”

A report Outsourcing Service Provider Performance Study by advisory firm EquaTerra, involving senior figures is further revealing. It observes that global suppliers such as Accenture, HP, and IBM would have to play catch-up to match the skills, flexibility, and quality of work of Indian firms such as Infosys, TCS, and Wipro.

English: The winning factor against the Chinese

Successfully carrying out global job shipping in services requires availability of qualified men and women who are proficient in the English language. This is a critical competency that India enjoys over China, which is struggling to educate its citizens to learn the language in sufficient numbers.

The Indian English speaking population is increasing at a rate of three percent per annum; significant figures when considering India one billion plus population. Already more than 11 percent of its population speaks English. Approximately 226,449 speak English as their first language; 65,000,000 Indians speak it as their second language.