China climbs outsourcing attractiveness ladder

PC Advisor reports.

That, says Everest's analysts, officially makes China a mature market for offshore IT outsourcing. And the growth is expected to continue: Everest predicts that China will rake in nearly $10 billion by 2015 and remain a viable option for IT leaders seeking to cut labour costs for the next 13 years. According to Everest's offshore locations survey, conducted earlier this year, China now ranks third in attractiveness to IT buyers behind India and the Philippines.

But China has a markedly different value proposition for IT leaders than its two biggest rivals, Network World notes. While an American CIO might go to India or the Philippines to support US operations at lower costs, the reasons for engaging a service provider in China are more complex.

The country can be 30% to 45% more expensive than India or the Philippines for IT and business process services. Quality English skills, even in large cities like Shaghai and Beijing, are lacking. And the typical size for a global delivery centre is 400 to 600 full-time employees; only a few global companies set up operations of 1 000 workers or more.

The upside is that China produced 5.8 million graduates in 2010 - more than half of them in engineering and management disciplines, according to Everest.