What You Should Know About Outsourcing to China

A veteran watcher of India's outsourcing market, researcher Joseph Rottman says that China is worth evaluating for offshore work but he warns labor costs are rising.

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Let’s talk about some of those concerns for U.S.-based IT leaders looking at China as an outsourcing destination, like English language skills.

Rottman: English proficiency is the elephant in the living room. It’s a gigantic hurdle for Chinese development firms who want to go after the U.S. and English-speaking market, and you cannot underestimate how difficult that is going to be for them to solve this problem. To give you an example, the brochures for these conferences that were targeting U.S.-based multinationals were riddled with poor translations.

The government is going after this problem full force. English is required in universities. Corporations like Neusoft have a lot of English courses. A great example is Oracle. They have a game the general manager of the captive center put in place. If a manager catches an employee speaking Chinese, he can fine them one Yuan. But if an employee catches a manager, he can fine him 10 Yuan. It’s a fun game and people try to trick each other. And all the fines go into a kitty for parties. The GM says the only way to get better is to speak English all day, every day. It seemed to be paying off. The IT professionals in China view English proficiency as critical piece of their advancement. [But overcoming the language challenge] is still several years away.... I was surprised by how bad the English proficiency was. Many of the conference sessions I went to feature speakers speaking Chinese with English translation, and the English was incoherent. You couldn’t take any content away from some of the sessions. So you can imagine how the requirements definition phase would be going from English to Chinese to code.

How long before they start to overcome the language issue?

Rottman: It’s still several years away.

But, you know, what they’re really lacking is a NASSCOM [National Association of Software and Service Companies, India’s IT industry trade organization]. China has so many small players, but no forward-looking, outward-facing organization to coordinate things. It would be great to have a Chinese version of NASSCOM in place to help with marketing and act as a single clearinghouse of data on the market.

Next: The Chinese government's role in industry

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