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India to remain world's favorite offshore spot
By siliconindia
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Tuesday, 20 January 2009, 17:03 IST |
3 Comments
Bangalore: A good command over English language and a huge talent pool may help India remain as the favorite offshore destination in the world, while the country is likely to face stiff competition from China in the future.
Presently, India is well ahead of China in terms of the revenue from the exports of IT and ITeS based services, which accounts for 26 percent of the total revenue over China's only just above three percent. A recent Deutsche Bank Research report said that China has advantages over India as the country can boast of a qualified labor force which is one of the most important prerequisites for successful offshore locations. Moreover, China also has government support and a dynamic home market which the suppliers of IT services use as a stepping stone.
On English language and intellectual property protection (where China is lagging behind), the report mentioned, "languages can be learnt, software piracy and other violations of intellectual property can be combated. This requires political resolve and the ability to act, which the Chinese government has proved in other respects already."
China is placed second in the Global Services Location Index as a result of the quality improvement of Chinese providers and the large supply of skilled staff. As many of Indian cities are reaching their capacity limits, Chinese cities still have more to explore. By 2011, Shanghai and Dalian could be a more attractive locations than Bangalore and New Delhi, forecasts market researcher IDC.
The report also added that the typical location advantages offered by more advanced economies will arise, such as highly qualified staff, excellent infrastructure and good institutions.
Chinese back-office and IT services are also attractive for international companies which produce or sell products in China. Here, linguistic and cultural barriers will disappear if the services are aimed at Chinese customers and employees. The home market thus allows Chinese IT suppliers to move up the learning curve and makes it easier for them to head towards the international arena.
Last year, almost 80 percent of India's IT and ITeS-based service revenue were generated by exports and the country currently has a share of 45 percent in the global offshoring market.