India and China are both big Asian countries that are cheaper in terms of professional services as compared to their western counterparts. For a long time, India’s supremacy has been unchallenged as far as the domain of outsourcing services is concerned, all thanks to the ever-blooming IT sector there. But recently, China’s government has been directing a lot of capital and focus in enhancing its IT Outsourcing (ITO) industry. This has put China up in the front as a business rival of India The offshore business owners are seeing the world’s most densely populated country in a whole new light. For western countries that are looking to outsource their business functions due to multiple reasons, IT outsourcing India vs China is emerging as the biggest confusion. Today, let’s assess the status of these mega markets in the race of acing the outsourcing war, keeping in mind the most prominent influential factors.
Population and Manpower
The advantage of being the world’s most densely populated country certainly makes China stand out. This clearly means that there’s more manpower in China but the experts predict that in a few decades, India’s population will be more than China.
ITO Market Value
According to an estimate, China garners an annual revenue of $20 billion for IT services, whereas it is $70 billion for India. Thus, there’s a huge gap in the ITO market value of both the countries and India has a clear edge presently.
Average salary and wage inflation
This is an important point when you analyse Indian IT vs China IT. Labour costs in China are cheaper as compared to India. An entry-level Indian IT professional can earn up to $8,400 a year, whereas for a Chinese professional, it’s $7,000. The wage inflation rate in India is again higher than China.
GDP (Gross Domestic Product)
GDP is a big influencer when we talk about IT outsourcing India vs China. India is going up subsequently and its GDP is the fifth largest in the world today. However, China stands taller with the third largest GDP in the whole world.
Customer Reasoning
The main reason clients look at developing countries like India and China for outsourcing is cost competitiveness; high quality of work is another benefit that attracts them. But IT buyers around the globe feel more inclined towards India for outsourcing business processes and towards China for manufacturing facilities.
Scope of IT services
It’s an unavoidable fact that China is lagging behind India in software and process outsourcing for knowledge, consulting and business functions. China, however, is progressing more in the product development industry.
English Fluency
When it comes to dealing with the western countries, English proficiency is a big skill. In India, English is practiced as the widely accepted business language, unlike China. So, business owners consider outsourcing services in India a better option as coordinating with them is much easier.
Management Skills
IT geeks in India are renowned for their management maturity. Whereas in China, there is a scarcity of middle and senior managers. Hence, the Chinese IT professionals are at a disadvantage in terms of leading large teams, understanding the western business acumen and communicating with the global clients.
Is China a threat to the Indian ITO industry?
China's improvement in the field of software is certainly a challenge for the Indian software industry but the trust that the western countries have in outsourcing to India seems to be unshakable for a long time to come. Plus, as the Chinese IT industry is striving to go up, the Indian IT hub is also getting better day by day. So, it’s not wrong to say that India continues to be the most popular destination to outsource IT functions by far.
