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Outsourcing To India Vs. China

August 12, 2009

The Philippines and China will provide India with tough competition in offshore outsourcing operations in the coming years, according to a business process outsourcing (BPO) firm based in the US.

The managing director of NeoIT, Avinash Vashista, told at a seminar on Scaling up BPO operations at Infocom 2007 on Wednesday that both China and the Philippines had the capability of providing high-quality work at an affordable cost.

He said the Philippines was in a better position compared to India as Filipinos were not required to undergo accent neutralization training due to their better English speaking capability, owing to the presence of a US naval base there.

Compared with China, he said that India was in an advantageous position in terms of English speaking capability, although Indians required accent neutralization training.

Vashista said that now high-end BPO operations like knowledge-based transactions, claims processing, financial accounting, human resources and complex banking transactions were being outsourced offshore.

This, he said, would give India a tremendous opportunity in this sector.

According to a NeoIT study, Canada and Ireland were the two countries where quality of work was the best, but costs were high.

Changes in the Chinese IT Industry have been phenomenal. The country is making remarkable improvement in increasing English-speaking software engineers to sustain IT offshoring projects. The Chinese government is making serious efforts to attract investors and widen its revenue from the IT sector. The transformation has been termed as the ‘Changing face of China’. The growth had left the leading IT outsourcing giants and the government of India, tense. Is the growth of the Chinese Software Industry a threat to the Indian IT rule? This paper provides a discussion on India and China IT Outsourcing War
Jobs may not be growing fast enough in the U.S., but they are multiplying elsewhere. Over the next 15 years, 3.3 million U.S. services industry jobs and $136 billion in wages will desert the country, according to research by Forrester. Although a flurry of low-wage countries will benefit from the trend, China and India have so far scooped up most of the jobs and they are now home to the biggest overseas operations of some U.S. companies.

Why are jobs being farmed out to these two destinations in particular? Both countries offer cheap labor rates and have different areas of expertise. The cost of an entry-level programmer in China is 30% to 50% less than one in Chicago. Additionally, a combination of factors like standardized business application, better online cooperative tools and increased bandwidth have recently precipitated the rise of off-shoring.

Of the two countries, India remains the No. 1 choice for many U.S. companies because of the maturity of its outsourcing market and its telecom infrastructure. But China is quickly imposing itself as a cheaper alternative, especially attractive to companies eager to explore its huge local market. Other countries like the Philippines, Singapore, Russia and Ukraine have lately surfaced as interesting alternatives to the two giants. But they lack experience and, in some cases, political stability.

In the upcoming years, expect India to continue its move up the food chain and take on some of the more complex outsourced tasks while more back-office jobs move to rock-bottom wage countries such as Vietnam and Uruguay.

One Comment leave one →
  1. August 27, 2009 1:42 pm

    Nice comparison mate.. but honestly i would prefer the philippines over both, lol

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