software outsourcing

A blog related to software development company and offshore software outsourcing

Wednesday, July 27, 2005

India and China in software outsourcing

Before few years, when some American companies opened their offices in china for software outsourcing and hired Chinese programmers for offshore software development, initial response from their prospective clients was not good. At that time, all western companies were looking for software outsourcing to India. Because, India was very successful in offshore software development and people were very much satisfied with Indian programmers for their coding related work.

But with the number of US companies increasing their operations in India, wages in India are going high. It has also increased manpower turnover and in turn delivery problems. Because of which, clients are seeking for alternatives like china, Philippines, Russia, Poland, Romania etc. In a survey by management consulting company DiamondCluster, in 2004 not a single company mentioned that they are outsourcing software development to China. But in the year 2005, 6% companies mentioned they are in china. Companies which are expected to open software outsourcing operations in China have risen from 8% to 40% in just one year. Bigger attraction for china is, its reliable infrastructure and skilled workers. Although wages in developed cities like Shanghai have gone up, overall they have remained lower then India's. But biggest obstacle in their path is deficiencies in English fluency unlike India.

On the other hand, many Indian companies have started their operations in China. Infosys is planning to have office near to Shanghai. Accenture is also looking at china. And cost of a development center in china is 25% lower then cost of Indian development center. Although, it is considered that, India will move up in the ladder and handle more consulting work.