Offshore Outsourcing Wars: China Versus India

During the past ten years, China has been considered the biggest challenger to India as the leader in the burgeoning offshore IT outsourcing (ITO) industry. While they are both big and inexpensive compared to Western nations, there are many noticeable differences between the two major emerging markets.

All customers agree that India and China offer the promise of low cost, large talent pool, and expertise. However, India wins out when it comes to language requirements and co-location with business process facilities while China gets the nod for access to the local market and co-location with manufacturing facilities.

Regarding salary, China’s labor costs are cheaper. An entry-level ITO worker earns $ 7,000 a year versus $ 8,400 in India. An experienced Chinese team lead earns $ 14,700 compared to $ 17,000 in India. As for managers, they earn $ 30,800 per year in India and $ 22,600 in China.

As for scope of IT services, India leads the way, offering IT, business process, and knowledge process outsourcing. In addition, consulting services gain in stature. Offshore software development in India is really becoming a force. Meanwhile, the focus in China is mainly on software and product development.

Management reigns supreme in India, which delivers personnel with strong project management skills. Plus, they invest heavily in programs designed to strengthen middle management capabilities. China clearly falls short with a dearth of middle and senior managers who have the knowledge to handle client expectations, lead large teams, and communicate confidently with customers.

When it comes to infrastructure, China has poured lots of money into its transportation system, power supply, telecommunications, and high-speed broadband. The result, is a significant rise in offshore software development in China. As for India, its infrastructure is noticeably weak, failing to keep pace with economic growth.

In the service delivery model category, Indias traditional third-party outsourcing deals prevail as captive centers are sold or go out of business on a regular basis. Chinas captive centers account for over half of all IT service delivery.

The supplier base race has India in the lead boasting a robust and competitive provider environment led by a legion of Indian-owned, publicly held suppliers and large local operations of global providers. As a result, offshore software development in India is growing by leaps and bounds. China’s market is fragmented and dominated by small- to mid-size suppliers, including Chinese owned providers, Western-managed companies, and local operations of global suppliers.

Indias IT valued outsourcing customer base is comprised of U.S. and European buyers. In China, domestic companies dominate its customer base, followed by those from nearby Asian countries, including Japan. For those foreign companies that choose China for offshore software development, they are pleased to discover the cost savings and high quality work.

While there may be a debate about whether India or China is the better choice for ITO, its important to remember one thing: When it comes to find a good outsourcing company, its not so much the country you choose but rather the vendor.

Accelerance was founded in 2001 to help companies quickly build great software applications and products in the most risk-proof and cost-effective way possible. Today, the company offers a variety of tools, processes, products, consulting and coaching designed to simplify working with companies offering offshore software development, near-shore and onshore outsourcing vendors and other related services. One of Accelerance’s most valuable properties is its network of prescreened, pre-qualified experts, global IT offshoring partners and software devel