Back office ops could move from Chandini Chowk to China

[dwarakesh]

Despite the advantage of qualified human resource and a supportive government, China is still a far cry as an business process outsourcing destination when compared to India. But the Chinese may soon give Indian outsourcers a run for their money according to a new report by Deutsche Bank Research .

Currently India's IT and ITeS industry is comfortably positioned with over 26% share in export revenues compared to China's 3%. But China should not be underestimated in this sphere says a report published in the Economic Times.

According to the Deutsche Bank Research, China has an advantage as the country can boast of a qualified labour force which is one of the most important prerequisites for successful offshore locations. Besides, the country has government support and a dynamic home market which the suppliers of IT services use as a stepping stone.

What works against China is the lack of a large English speaking pool and the protection of intellectual property. However these two are not disadvantages that cannot be overcome. "This requires political resolve and the ability to act, which the Chinese government has proved in other respects already," says the Deutsche Bank report.

What works for the country is that it is already at the number 2 position in the Global Services Location Index. Also some Chinese cities like Shanghai could benefit from the fact the leading Indian centres are reaching their capacity limit.

Last year, India generated close to $40 billion in proceeds from IT and IT-based services. Almost 80 per cent of these revenues were generated by exports. Global offshoring has a market volume of roughly $70 billion, with India share in the global market totaling 45%. "However, China is unlikely to catch up with India in the medium term," the report added.

Source: BPOwatch india