Offshore outsourcing: Can China steal India's thunder?

By Stephanie Overby, CIO |  IT Management, China, India

China has mature offerings in some areas--embedded software, basic application development--but its five years away from maturity in ERP support, for example. And it could be at least a decade before the country is able to offer anything near the end-to-end IT services necessary to encroach on India's $70 billion offshore outsourcing market. "China has made a lot of progress, but India continues to raise the bar," says Master. "China may never truly compete with India on the entirety of services offered by Indian providers."

If China is to make gains on India in offshore outsourcing, the biggest sign to look for, says Karamouzis, is "ink on deals. Clients signing outsourcing deals with China demonstrates a level of confidence." If customers begin to consider bids from Indian and Chinese providers on equal footing, says Master, that will be further evidence of China's maturation. And "when we start seeing Chinese suppliers set up operations in India," jokes Master, they will have won.

In the end, it may not be an either-or proposition. "Each market must be considered as a delivery location on an individual contractual basis," says Butler of Ovum, "as each has social, political and economic advantages." "One of the fascinating aspects of the whole India vs. China consideration," adds Master, "is the reality that India and China are not, and never will be truly fungible."

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