China’s Role In Global Outsourcing Arena

February 17, 2011

Outsourcing to China has many attractions. First of all, the huge population that is available for skilled labor. Since there are many college graduates in China, there are plenty of people ready to work for low wages. Moreover, China has established a communications and transport infrastructure that is up to par with the rest of the world. The recent Beijing Olympics ensured that China’s infrastructure has progressed with its presence on center stage. Besides all this, China is also seeing a supportive government that is capable of promoting foreign investment – this is something that was lacking in China’s hardline leadership in the past. However, analysts are still posing tough questions for China’s credibility in an already congested outsourcing marketplace.

Currently, global firms have already made good use of china’s outsourcing capabilities by concentrating on regional demand. Global outsourcers like Accenture, Infosys, and Genpact along with China-centered companies like Bleum and M&Y Global Services. In these cases, the strategy has been to target Chinese or global firms interested in catering to regional demand.

However, Capgemini’s new location there was a Chinese resources processing for European and U.S. operations. Like many other global outsourcers, Capgemini is focusing on providing clients access to a network centers across the world. In this scenario, delivery location becomes a moot point.

Nonetheless, BPO and IT outsourcing are taking place in China for global services. This would mean that China is turning into an option as a marketplace for global services. The importance of China’s role in the outsourcing landscape will be determined by a couple of factors. One of the major factors will be price. If outsourcers are able to offer services from China close to the price of outsourcing to India, there is no doubt that China will surface as the leading global offshoring alternative to India.


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