India’s Outsourcing Lead is Threatened by China
posted in Outsourcing News and Top Outsourcing deals |India remains the world’s top outsourcing center but faces an increasing threat from rival China because of India’s high attrition rate, poor infrastructure and rising wages. China, the world’s fastest-growing major economy, is a manufacturing hub for mobile phones, textiles, cars and industrial equipment and is eyeing co-operation with India to expand its access to software.
Today, the outsourcing phenomenon is a crucial part of the operations of many businesses as they seek to cut costs and concentrate on core skills. The worldwide finance and accounting outsourcing market is expected to reach US$47.6bn by next year, with spending on the transaction management function expected to grow the fastest.
China and India are turning their economies around; they are now as the dragon and the tiger of global commerce, experiencing growth rates that no other large country can match. The results are being felt around the globe. These results are thought to remain the same for many years to come.
Still Indian outsourcing has a threat from China. As per the current situation Chinese cities may overtake Indian cities by 2011 due to massive investments made in various sectors e.g. infrastructure, English language, Internet connections, technical skills, etc which are favorable towards outsourcing.
India needs to pull down its labor costs as it is getting quite high as compared to the China. Another issue is that China and other destination are fast emerging as a major challenge to India in the BPO market.
We can even say that being new to the outsourcing industry today, China may too face exactly the same situation that today India is facing. Today India is having the problem of high employee churn rate, wages inflation and lower margins. The Chinese government need to help Chinese BPOs grow smart rather than just grow fast and that can’t be done by spending money alone.
Attrition rate is creating a big challenge in India. Clearly costs are going up and efficiency is coming down; if these things are coped up then Indian market would surely remain un-affected by the emergence of any country in the outsourcing industry.
