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Offshore outsourcing: 24 ways to compare India vs. China

Stephanie Overby | Nov. 29, 2010
ajor differences remain in the two mega-markets for offshore IT services, from language and management skills to industry focus and supplier bases. Here's a look at how the two stack up, using 24 key measures.

Service Delivery Model
In India, traditional third-party outsourcing deals predominate as captive centers continue to be sold or folded. In China, captive centers account for more than half of all IT service delivery.

Supplier Base
India has a robust and competitive provider environment led by a legion of Indian-owned, publicly held suppliers and large local operations of global providers, along with niche players. 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.

IT Outsourcing Customer Base
India's most valuable customers are U.S. and European buyers of IT services. In China, domestic companies make up the majority of the customer base, followed by those from nearby Asian countries such as Japan.

Process Maturity
India's outsourcers have put years of investment and training into software development and other process maturity programs. In China, process and functional skills necessary for requirements analysis, business process design, and use-case development are scarce, say analysts.

English Proficiency
Hindi may be the India's official language, but English is the unofficial language of business on the subcontinent with 232 million English speakers (226,449 of whom list English as their first language). China has just 10 million regular English users, though as many as 300 million may be learning the language.

IT Outsourcing "Brand"
"India, Inc." is known as the leading offshore outsourcing destination thanks to concerted efforts of providers, trade association, and government. China lacks a clear identity or common message with competing government initiatives, regions, cities and technology parks.

More than 85 percent of outsourcing customers cited "Chinese inscrutability" as a concern, according to Gartner, making relationship-building difficult. Leading outsourcers in India tend to promote transparency with customers, inasmuch as true openness is ever a part of an outsourcing deal.

PR Problems
This one's a tie. India's recent corporate scandals hit close to its ITO home, but did little to dissuade current outsourcing customers. China's product recalls made bigger headlines but have less relevance to ITO.

Signing on the Dotted Line
India has a strong tradition of private contracting and enforcement, similar to leading global providers, while China only recently moved away from trading agreement forms to more mature contracting capabilities.

Intellectual Property
China recently enacted IP laws, but security remains a top concern for outsourcing customers. India's IP laws are comparable to those in western nations, but enforcement remains challenging.


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