China Could Eventually Overtake India in Outsourcing

India may well be the current leader of the outsourcing market but China is slowly closing the gap with this nation, according to Ovum.

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The research firm says the competition is heating up and due to this, neither country can rest on its laurels.

India market declines

The new report titled ‘India and China: which will be the outsourcing powerhouse in the 21st century?’ says India’s share of the market is in decline despite the growing outsourcing industry.

China is continuing its march towards financial success and the report indicates that it is already providing substantial competition as the world’s outsourcing provider in terms of footprint, awareness and capability.

“Both countries are often touted as the low cost delivery location of choice, with many non-domestic vendors investing millions of dollars to set up operations in multiple locations in both countries,” says Jens Butler, principal analyst. “Add to this China and India’s growing influence as global centres of political and economic power, and it appears to be a two-horse race to the finish”.

Stability and governmental influence

Both India and China should be considered as separate delivery location, says Ovum, which emphasises that each market should be considered a delivery location on an individual contractual demand basis rather than as a broad brushstroke.

China and India have their own socio, political and economic-competitive and comparative advantages. Looking forward, the success of these nations in the outsourcing market will depend on the stability and governmental influence in their respective countries.

Ovum notes China’s five-year plans and the associated federal infrastructure investment and India’s province-led support for its home-grown free-market organisations. The research firm says these nations will have to continue their focus on such investment and direction because many nations such as the Philippines, South Africa and Latin America are slowly heating up the competition.

“These locations may not compete from a pure scale perspective, but they may well continue to extract market share from both, just as China continues to take share from India,” says Butler.