From the straits times.
AUG 28, 2003
China expected to 'outpace India' as IT services hub
CHINA will overtake India as a base for outsourced information technology (IT) services, according to Business Week.
'Gartner predicts by 2007, China will pull in US$27 billion for IT services including call centres and back-office work, matching India', the magazine said in its Aug 4 issue.
The amount is equivalent to S$47.6 billion.
Economic forces within China and overseas are causing outsourced work to flow into the country, said the magazine. China's low-cost talent is one advantage, it noted.
Although India is a powerhouse in high-end IT services, latecomers these days must pay higher wages for experienced engineers.
The magazine cited the example of BearingPoint, formerly KPMG Consulting, which opened a software development centre in Shanghai.
The company's Greater China president Bryan Huang was quoted as saying: 'BearingPoint pays US$500 a month for engineers in Shanghai. In India, the pay would be US$700 and in the US it would be US$4,000.'
While China now provides outsourced IT services to mainly South Korea and Japan, thanks to cultural, geographic and language ties with these countries, fluency in English is increasing, due to the growing number of multinational corporations (MNCs).
According to Business Week, several US manufacturers such as Sweetheart Cup and E5 Systems are convinced that China is the only place. Sweetheart says it saves 40 per cent by sourcing in China rather than India and in a business where pennies count, cost is a greater consideration.
Beijing also plans to forge partnerships with these MNCs to train IT engineers to meet the increasing demand for skilled service Chinese workers, fuelled by China's booming economy and the influx of multinational manufacturing companies, says the magazine.
Shanghai-based consultancy Con- nectITChina has estimated that China's software outsourcing revenue would more than double to US$5 billion by 2005, while Gartner forecasts that China needs four million more IT professionals to meet future demand, the magazine added.
Indian companies are also tapping the Chinese market. Fourteen big Indian IT services companies have set up shop in China, and Indian firms would eventually control 40 per cent of China's IT services exports, Gartner says.
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