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Offshore IT Services Showdown: India Versus China

By Stephanie Overby

September 07, 2007 — CIO — Offshore outsourcing’s reigning champion, India, squares off against its upstart rival, China, on software quality, staff costs, advanced business skills and more. We also figure in a few top of mind questions for the IT manager who’ll be traveling to his company’s offshore provider once a quarter: Can I get a decent cup of coffee, and how long will I actually be on the plane?

Tube Time
INDIA	EDGE	CHINA
Nonstop flight from Chicago to Delhi: 14 hours, 55 minutes		Nonstop flight from Chicago to Beijing: 13 hours, 20 minutes
Software Quality
INDIA	EDGE	CHINA
Capability Maturity Model (CMM) Level 5 (highest ranking for software development maturity)		CMM Level 3
Size of IT Services Industry
INDIA	EDGE	CHINA
$30 billion in 2006		$12 billion in 2006
Getting a Good Cup of Joe
INDIA	EDGE	CHINA
Learn to love tea. Local coffee options are weak		Starbucks locations abound in big cities
Scalability
INDIA	EDGE	CHINA
Tier-one vendors have tens of thousands of employees; can set up dedicated offshore centers for customers		Most work remains project-based only, due to the fragmented nature of the IT services industry
Advanced Business Skills
INDIA	EDGE	CHINA
Skills like project management and business analysis are gradually getting better, thanks to market pressures and more than a decade of experience serving Western IT services clients. But there's still plenty of room for improvement.		Poor project management and business analysis skills; limited experience serving Western IT clients.
MVCs (Most Valuable Customers)
INDIA	EDGE	CHINA
U.S. and Europe		Japan
The Languages of Business
INDIA	EDGE	CHINA
English/Hindi		Mandarin/Mandarin
Global Reach
INDIA	EDGE	CHINA
Local players have set up shop in the U.S., Latin America, Eastern Europe, and China.		Little expansion outside of China, except through acquisition or merger.
Intellectual Property Protection
INDIA	EDGE	CHINA
Investigates and cooperates with the U.S. companies on reported IP violations.		Encourages staff to protect client IP.
Cheeseburger Far from Paradise
INDIA	EDGE	CHINA
Good luck. If all else fails, try Millers 46 Steakhouse in Bangalore.		Many Western-type burger joints (with local flair).
Average IT Staffer Salaries
INDIA	EDGE	CHINA
$9,896		$10,095
Wage Inflation
INDIA	EDGE	CHINA
11% annually		8% annually
Phoning Home
INDIA	EDGE	CHINA
T-Mobile roaming rate of $2.49/minute		T-Mobile roaming rate of $2.29/minute
Currency Crisis?
INDIA	EDGE	CHINA
The dollar has depreciated 11 percent against the rupee in 2007; local service providers could pass the impact on to customers.		The dollar has depreciated 2.9 percent against the yuan in 2007.
Jaywalking as a Sport
INDIA	EDGE	CHINA
You’ll get hit by a car or pedicab.		Drivers will make an attempt to stop.
National Marketing Efforts
INDIA	EDGE	CHINA
National Association of Software & Service Companies (Nasscom) expertly sets the tone for conversations about India’s IT services industry globally.		Wants to set up its own version of Nasscom, but will likely be government run.
Popularity Contest
INDIA	EDGE	CHINA
Ranked number-one location for offshore IT services by Western IT services buyers. (Good job, Nasscom!)		Tied for number three with Eastern Europe (Latin America is number two).
Technology Infrastructure
INDIA	EDGE	CHINA
Top-notch IT infrastructure within technology parks and on major IT campuses. Outside of those areas, not so much.	Tie.	Solid IT infrastructure within technology parks, although not quite as good as India’s, extends to larger metropolitan areas.
Physical Infrastructure
INDIA	EDGE	CHINA
National telecommunications, power system and roads need major work.		Construction and modernization projects around the clock (thanks in part to impending 2008 Olympics), but bad traffic and smog in some cities.
Multinational Presence
INDIA	EDGE	CHINA
India’s share of multinational (IBM, Accenture, EDS) headcount devoted to offshore work has decreased by 9.5 percent in the past two years.		China’s share of multinational (IBM, Accenture, EDS) headcount devoted to offshore work has decreased by 15 percent in the past two years.
Geek Quotient
INDIA	EDGE	CHINA
Approximately 170,000 four-year bachelor’s degrees in engineering, computer science and IT (400,000 including subbaccalaureate degrees).		More than 500,000 four-year bachelor’s degrees in engineering, computer science and IT (but the accuracy of these Ministry of Education numbers has been called into question).
Supergeek Quotient
INDIA	EDGE	CHINA
Turns out about 40 PhDs in computer science per year.		Nearly 3,000 PhDs in computer science each year.
WINNER: INDIA!

SOURCES: CIO.com; Dean Davison, Jojo Aquino and Gary Schneider of neoIT; Forbes.com; Joseph Rottman of University of Missouri-St. Louis; Forrester Research; neoIT’s Offshore Insights ITO salary report 2006; China Ministry of Education; "Next Generation Offshoring 2006" by Duke University Fuqua School of Business and Booz Allen Hamilton.

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