Outsourcing: Can the Dragon ever beat the Tiger in the Outsourcing Race

Outsourcing is the process of transferring a business function to a foreign company. It lowers the costs, time and energy spent by the companies. India is the leader in the outsourcing market. India accounts for about 35 percent of the total outsourcing and Indian IT companies have made their mark by their comprehensive quality services at lower costs. Infosys and Wipro are big names in the global arena. Indian IT exports are worth more than $40 billion. Big multinationals are rushing to India to cut their costs. China too is emerging as a big player with software exports of $10billion and with a growth rate of 39% in 2008. But the billion dollar question is: can China surpass India to become a leader or would it take decades for China to come somewhere close to India? Let’s solve the dilemma.

Where does India hold the advantage over china?

English: this is the biggest factor which has single handedly put India in the lead. India produces 20,00,000 English speaking graduates every year out of which 4,60,000 are IT graduates. China lags behind India in this regard by only producing 50000 IT graduates. English skills have been the biggest headache for China. Lack of proper communication with the foreign clients make them lag behind their Indian counterparts who excel in English skills and communication

Democracy: India is a democratic country while China is under a Communist regime. Lack of protection of the intellectual properties of the clients makes them highly vulnerable. Piracy is still rampant in China.

Quality services: India provides great quality services living up to the international standards with more broad comprehensive solutions unlike China which focuses on limited solutions.

How will the Dragon become the king of the jungle?

China’s real state and power costs are much lower as compared to India. The average salary that a Chinese commands is $6000 as compared to $6000 to $12000 pocketed by an Indian employee. China has invested close to $ 5.4 billion dollars in its IT education. China is spending billions to have a global advantage in English by investing heavily. The total number of English training providers was 50,000 and increasing at a blistering speed. China’s infrastructure is way above India’s. So improvements in English skills and strict it regulations can make China attract more foreign clients and be a potential threat to India.

How can the Tiger still rule?

Infrastructure can be a big stumbling block for India in the future. Indian government needs to improve the infrastructure in it which is still floundering. The government needs to make it easier for future entrepreneurs who still have to wait for a long time to start a business. The Satyam scam and the Mumbai blasts were big jolts to the Indian industry putting question marks on the corporate governance and the safety of the work environment. Such future events could act as setbacks for the outsourcing business. So India needs to work on many aspects to keep itself in the race and not allow others to take its pie. Even countries like Philippines and Brazil are putting up a tough fight. The Congress victory in the elections was a big boost and there is hope that it will bring more reforms to keep the sunshine sector ever shining.

Vikash Kumar

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