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Outsourcing It to China, Research Paper Example

Pages: 2

Words: 487

Research Paper

Historically India was the place that CEO’s looked towards outsourcing IT. This was because of high quality inexpensive IT staff, good infrastructure and service commitment.  Building upon this approach China has now entered the IT outsourcing market. CIOs are beginning to see China as a cheaper alternative to India for outsourcing business IT requirements. China is positioning itself to become an IT outsourcing superpower in less than five years time. Recent changes and trends in both economic and political structures pave the way for phenomenal growth in the Chinese IT services industry. According to the US based research firm Gartner Dataquest, China’s IT services market has grown by 42% per year since 1997, and it is projected to reach $8.9 billion in 2006. Gartner predicts that China could rival India as the leading offshore services provider by as early as 2007. Chinese Universities turn out around 400,000 technology graduates a year, and these highly technical and skilled workers are creating a resource base that will rival India in terms of both quality and service. Clearly western business will need to understand how best to penetrate and exploit this almost untapped resource (Chan, 2007)

In early 2004 an average of 8% of CIOs polled by Diamond Cluster International stated that they were considering some degree of outsourcing to China in the next three years. By the middle of 2005, this figure had increased to over 40%. China is very different from India, which is dominated by a very limited number of large firms like Tata, Infosys, and Satyam. The model in China avoids the danger of monopolies inherent in the Indian model because the Chinese IT sector is spread amongst a mix of much smaller firms. China has also concentrated on building up its IT infrastructure. This infrastructure growth is accelerating at a much faster rate than in India. It is also important to note that building an IT infrastructure from scratch, as is the case in China, avoids the complex issues involved in grandfathering legacy systems. While China does have problems it will need to address to overcome the ad hoc way in which its IT sector has evolved in the past, the government is working hard to pull order out of chaos. The use of off-shoring IS technologies is likely to continue as firms seek to find ways of reducing costs and streamlining their businesses. If Companies did not take this approach they would have to revert to Business Analysts in the domestic market and pay higher salaries or look at alternative ways of doing business. “the Chinese government unveiled a five-year plan to create 1,000 large and medium-sized suppliers, 100 multi-national corporate clients, and 10 competitive cities for technology outsourcing” (Overbie, 2010).

Works Cited

Chan, S. S. (2007). Outsourcing IT to China. Retrieved 11 21, 2010, from Outsourcing Institute: http://docs.google.com/viewer?a=v&q=cache:X1HYQ-61-CwJ:www.outsourcing.com/china_trends/pdf/IT_Outsourcing_China.pdf+IT+outsourcing+to+China&hl=en&gl=uk&pid=bl&srcid=ADGEESgqZd5lRkKvrCrwDaCM1aMTMTgTVPhLbI9ZirnnkPEB5DG8BcdKx25q7maItWf2Tn5t2x55p-xCpYs8Y68s8

Overbie, S. (2010, 11 19). Offshore Outsourcing: Can China Steal India’s Thunder? . Retrieved 11 21, 2010, from CIO: http://www.cio.com/article/638140/Offshore_Outsourcing_Can_China_Steal_India_s_Thunder_

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