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


