Chinaâ€™s push to become an alternate BPO hub for MNCs tackling soaring wages and high attrition rate in India remains a distant dream as its offshore market is developing slower than expected.
Despite significant government support and huge level of visibility on the global arena, Chinaâ€™s offshore market has not taken off as expected and still has a long way to become a potential alternative to India.
Multinational firms, considering China as a â€œquick-fixâ€ solution to deal with rising costs and high attrition of employees in other offshore locations like India, would be sorely disappointed by the countryâ€™s slowing offshore momentum.
Chinaâ€™s offshore and global delivery model two years ago it was seen as the country was the key challenger to India for offshore supremacy. However, latest research shows that to date, the market has not taken off as expected.
It was predicted as early as in 2002 that over three million BPO jobs in the US would go offshore and it was considered that firms with large bases in India will consider other geographies when addressing the risk mitigation issue.
Even countries like the Philippines, Mexico and Brazil could prove to be better alternatives than China for diversifying offshore exposure. The Philippines, Mexico and Brazil may provide better alternatives than China in terms of skills, language and convenience.
Noting that Chinaâ€™s percentage of overall offshore resources has dropped and other countries growing at a faster pace, the country needs to refocus its offshore efforts.
Instead of trying to compete in areas like application development and management, where India clearly dominates, China should encourage its local firms to focus on other areas like testing, data management and product development services. Chinese firms also need to implement strict intellectual property controls and undertake training programs.
For other countries vying for the lucrative off-shoring pie, economic development agencies in Thailand, Malaysia, Egypt and Morocco need to do more than just re-labeling the pool of engineering graduates as being ready to export their services.
Their education programs ought to focus on advanced skills like project management and advanced architecture skills, while at the same time, respective governments should invest significant funds to market the country as an alternative to the offshore incumbent â€“ India.