Chinese media claims ''China edging India in BPO'' – but here is the real truth
Babu Ghanta
Jun. 23, 2007

Is it dream or reality? Only time can say. China claims: China's large and fast-growing domestic IT services market is a great strength for its outsourcing industry.

The biggest problem China faces for software and business process outsourcing is the language barrier. Chinese students in America suffer for the same reason. The advantage of India over China is in the mastery of the English language.

What will happen is as follows: America and other western nations will soon close the door for all Asian BPO activities, because of recession and financial meltdown in America and Western Europe. After that India and other nations that became so dependent on their outsourcing revenues from the western nations will have to reinvent themselves. That is where China has a distinct edge. What India has done to other nations is what China will do to India. Chinese domestic firms will provide outsourcing contracts only if Indian firms use a Chinese joint venture to deliver the service.

India will be forced to teach the Chinese and transfer the technologies. Indian IT chiefs have made a blunder. India will understand in the next several years. India should have grown its domestic IT industry and created software products to sell to the west instead of ‘body shopping’. Instead telling the clients – tell me what you need, I will tailor made for you because my labor is cheap, India should have created some world class software products and sold them at fair value because of the product demand and quality – not just cheap labor.

No IT industry can grow without a strong domestic demand. For example, very few European software companies ever made headway in America. American software companies dominate the world because 80% of IT demand comes from USA. The only way to create a strong industry is to have a strong domestic demand. India never followed that rule.

Indian IT sector is filled with traders that like to trade human programmers. They treat human beings as vegetables in the market place.

"China's large and fast-growing domestic IT services market is a great strength for its outsourcing industry," corporate vice-president and managing director of Electronic Data Systems (EDS), China and South Korea, David Wirt has said.

Unlike their Indian counterparts, outsourcing companies in China work closely with local clients from industries such as banking, securities and manufacturing. These experiences allow them to develop their own domain expertise and enhance innovative capacity.

"This is impossible for Indian outsourcing companies due to their small local market," Wirt said. "They have to buy expertise and knowledge due to the small domestic market," Wirt was quoted as saying by ''China Daily''.

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