A few of the countless motivating forces which have caused leading global companies to turn to China for their global resourcing strategy
There are a number of factors that effect the decision of where to place global resourcing efforts. Of course the reasons will differ with each company's business situation and needs, and it is imperative to think through your organization's goals and motivations when developing an appropriate strategy.
GEO-POLITICAL DIVERSIFICATION:
Spreading offshore activities across different countries protects you from unexpected changes in politics, business/currency conditions or other changes.
VENDOR DIVERSIFICATION:
Having more than one choice also means you can respond and scale more quickly and gives you the flexibility of selecting the best vendor for each job.
RESOURCE AVAILABILITY:
China university systems expected 5m graduates in 2006 up from only 3.5m in 2003. Graduates more than doubled in the past ten years.
MARKET OPPORTUNITY:
Establish a presence in the domestic Chinese market. Technical resources in-country can serve as an effective beachhead for future business development activities.
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ACCESS FASTEST GROWING ECONOMY:
China is now the 2nd largest economy in the world and continues to grow at a 10% rate annually. The economy grew at its fastest pace for ten years in 2006, adding 10.2% to GDP with forecasts to add 10.2% in 2007.
COST ADVANTAGE:
China's costs are typically 20-30% lower than India and much more resistant to the kind of wage inflation that India is experiencing.
LOCATION, LOCATION, LOCATION:
Many companies, especially from the Western US, view China as their preferred destination based on the ease of travel to the country. In addition to being extremely unproblematic to arrive at, its domestic transportation system is very well developed
English
In 2006, the Ministry of Commerce launched the "Ten-Hundred-Thousand Project" for service outsourcing in China,Object of the project by the year 2010.
Infrastructure
Infrastructure is another critical factor when deciding where to outsource. Inside the country, China is rapidly developing its voice and data networks with the world's largest wireless network and fiber optics reaching the most remote areas. Between the U.S and China, Internet speeds can be experienced similar to what is available within the U.S and between the U.S and India.
Government Support
The Chinese Government support is proving critical to putting China on the software outsourcing map. In addition to investing heavily in developing a skilled workforce, the Government is providing tax breaks and incentives to software outsourcing companies setting up operations in China or improving their capability.
India is overheating
Attractive alternative to India where overwhelming demand makes it increasingly difficult to access quality resources. There is a widening gap of software outsourcing in India between supply and demand. The increase in demand remains but there is a dwindling talent supply and a hike in prices.
