China Seeking To Take The Helm In Outsourcing

Jacob Cherian September 26, 2010

Indian outsourcing firms like TCS and Wipro have been dominating the outsourcing landscape for a number of years. However, the recession has impacted the way the industry is doing business and changes are taking place. Outsourcing to India is no longer the mainstay, while top outsourcing countries are finding a way to gain market share.

Firstly, Indian companies have to cut down their rates due to competition to a variety of outsourcing hotspots including the Philippines, Latin America and Eastern Europe. Nearshoring opportunities have propped up in Mexico and Latin America as an alternative to offshore activity. More importantly, there are some companies in the U.S. that feel that American jobs should stay at home and this has resulted in outsourcing assignments to low cost areas like North Carolina for example.

As Indian outsourcing firms regroup to pick up a new strategy amid a recovery, there is yet another competitor that India needs to confront – China. China has been making a huge impact in the outsourcing industry. The country’s economy has been sweltering in recent years and with more and younger graduates and engineers, China is ready to become a global powerhouse in outsourcing.

With the world’s largest population and a high proportion of skilled workers, China is set to takeover the lead from India in offshoring. Moreover, the country has received firm support from its government to take advantage of this lucrative market. This could cost India a wide margin in market share in the near future.

Apart from that, India’s labor costs are rising. Although India’s quality may be higher, there are companies looking for cheaper pricing and China is well poised to dominate the industry.