Project Outsourcing

Despite the jobless rate in America at 6.4% and China considered a serious economic rival outsourcing is becoming more and more common. Although India is still a massive player in the outsourcing industry with revenue from IT services touching $12.7 bn China is coming into the picture.

There are some distinctive advantages to outsourcing in China. First is the large labour pool. Some companies are finding China to be even cheaper than India. For example ‘American manufacturing companies are discovering that cost advantage, too. Sweetheart Cup Co., an Owings Mills (Md.) maker of plastic plates, cups, and utensils for customers such as McDonald’s and Wendy’s International, hired consultancy E5 Systems of Waltham, Mass., to develop a system to track production processes at its 14 North American factories. E5 is doing the job in Shenzhen, where it has a joint venture. Sweetheart figures it saves 40% by sourcing in China rather than India. In a business where pennies matter, “cost is a consideration in everything we do,” says John McGregor, Sweetheart’s chief information officer.’ Another example is that in Shanghai for example the cost for hiring an engineer would be $500 a month while in India it would be $700 and in the USA it would be $4000.

Another major advantage is that to access Asian markets. For example ‘One reason Accenture picked Dalian for its rapidly expanding software-development office, which opened in mid-March, is that the city is a major hub for Japanese and Korean multinationals. When it comes to working in those languages, says Accenture China manager Gong Li, “it’s much easier for our people in China” than for those in India or the Philippines.’ China is also making inroads as an outsourcing base for Western nations because off the large amount of back-office work brought to China by Western multinationals.

According to Sudip Baneerjee who is living in Shanghai president of enterprise solutions at Wipro Solutions which has a development center near Shanghai whrer in China the labour force there is driven and hardworking and the quality of output is good.

However there are certain concerns with working in China such as concern about intellectual property violations.

Although most Chinese outsourcing firms are very concerned with data security and protection using a number of security measures such as keeping close tabs on its employees a number of western companies still remained concerned about IP. ‘China’s history has led the country to adopt a unique outlook on business, said another attorney. “They did away with property in terms of Communist theory. Now they’re trying to establish the recognition of intangible property rights in a country that is pretty poor,” said David Weild, a partner at Fross Zelnick Lehrman & Zissu PC, a New York law firm specializing in IP.’

There is also a great need for IT engineers due to an expansion in the software outsourcing industry which the Chinese government is desperately trying to meet through by forging deals with multinationals. For example it has an agreement with IBM to train 100,000 software specialists in the next 3 years.

In conclusion it can be said that China will be a serious force as an outsourcing center in the future.

Hira Channa