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China
and its neighbor, India have been causing a flutter in the
outsourcing business by clinching more and more deals in the
global market. The outsourcing phenomenon, which began in
the 1990s, has benefitted a number of developing economies;
more particularly India and China. Imparting a new impetus
to these nations, it has transformed them into potential economic
superpowers. These two Asian giants continue to lead the outsourcing
force with unique strengths. While China is seen as an industrial
powerhouse, India is considered as a powerhouse in services
with China trailing close behind. This closeness of "The
Dragon" is generating fear among the Indian software
outsourcers.
Currently,
India's share in the global market for IT and BPO stands at
44%. India's revenue from this sector was $28 bn in 2004-05
as against the total global market worth of $40 bn. With the
rapidly developing software market reaching RMB3.13 bn in
2005, and expected to reach RMB7.49 bn by 2009, India faces
an ominous competition from other emerging markets, more particularly
from China. With increased momentum in outsourcing, the two
Asian giants are increasingly digging into each other's markets.
Both economies are indulging in increasing investment in the
other's economy to profit from rapid economic development
and the outsourcing boom. India's leading outsourcers have
been quick to establish their presence and reap benefits from
the flourishing Chinese economy. Infosys Technologies, the
software giant, plans to explore and expand its business in
China with an investment of $65 mn over the coming years.
Infosys is followed closely by other big Indian companies
such as Tata Consulting, Wipro and Satyam Computer Services.
The scarcity of skilled labor and the high growing cost of
labor in India are said to be one of the reasons for extending
their global operations from China. On the other hand, China's
corporate giants are increasingly exploring Indian markets.
The driving factor behind Chinese investment in India is the
nascent and less established information services in China
as against the experienced and high-level position of India.
Chinese corporates backed by their government have found Indian
land to be the best for training and investment opportunities
to boost their software research and development. |
