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India remains world’s backoffice amid Chinese competition

India remains world’s backoffice amid Chinese competition
PTI
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First Published: Mon, Jan 19 2009. 05 59 PM IST
Updated: Mon, Jan 19 2009. 05 59 PM IST
New Delhi: India is likely to retain its tag as the backoffice of the world for the time being, but the country is expected to face competition from its neighbour China in the long run, a latest report says.
India at present is in a comfortable position as the share of IT and IT-based services in China’s export revenues comes to only just above 3%, compared to over 26% in India, but China should not be underestimated in this sphere.
“China has an advantage as the country can boast of a qualified labour force which is one of the most important prerequisites for successful offshore locations. Besides, the country has government support and a dynamic home market which the suppliers of IT services use as a stepping stone,” Deutsche Bank Research said in its latest report.
China has however two major, structural disadvantages the command of the English language and the protection of intellectual property.
The report further highlighted that “languages can be learnt, software piracy (and other violations of intellectual property) can be combated. This requires political resolve and the ability to act, which the Chinese government has proved in other respects already.”
China already ranks in the second position of the Global Services Location Index, mainly because of the large supply of skilled staff and the quality improvements of Chinese providers.
Besides, some Chinese cities could also benefit from the fact that Indian locations are reaching their capacity limits. According to forecasts published by market researcher IDC, Shanghai could by 2011 become a more attractive location than Bangalore, and Dalian more attractive than New Delhi.
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First Published: Mon, Jan 19 2009. 05 59 PM IST