The China Question: When, Not If, Will It Rival India?

Ann All

For as long as we can remember, folks have been talking about China as the "next India."


Every region of the world -- from Latin America to Eastern Europe to Africa -- wants to be the "next India." Yet China seems to be the only country with the population, the skills and, perhaps most important, the drive to make it happen.


As fast as India's outsourcing economy is growing, China's is growing faster -- 36 percent a year, according to Analysys International, which projects it will reach $4 billion by 2009.


Some executives, like the CEO of software development firm Freeborders, insist Chinese developers are more creative thinkers than their Indian counterparts. And the country's infrastructure tends to be more reliable, at least partially due to government economy-building initiatives.


Indian firms like Tata Consultancy Services are rushing to beef up their Chinese presence. Tata, which is in a joint venture deal with Microsoft, expects to multiply its Chinese workforce by more than 10 times over the next five years, to 5,000 employees. Other major investors in China include IBM, HP and Siemens.


It's also becoming a destination of choice for management types hoping to hone their skills and get a leg up in the global economy. A Dallas Morning News article quotes a Texas attorney who accepted a position there as saying China is "the industrial revolution in early 19th-century America all over again."


That bit of hyperbole notwithstanding, there are, of course, challenges: cultural differences, concerns over intellectual property and, oh yeah, a Communist regime.


Some observers, like an executive quoted in this BusinessWeek article, say it will be at least a decade before China's IT outsourcing industry will rival India's.


Yet few seem to doubt it will happen. The question is "when" rather than "if" -- a question that no other country appears ready to pose just yet.

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Add Comment      Leave a comment on this blog post
Jan 29, 2007 6:01 PM jon jon  says:
China is growing at 36% a year ?  and where did you pull this number?     Reply
Jan 29, 2007 6:10 PM jon jon  says:
Just so othat you know, China's growth rate is 10.7%It has been by far that fastes growing economy.  India is the second fastest at 8% .  I think we (USA) are somewhere like 4%.http://www.time.com/time/business/article/0,8599,1582477,00.html  I guess you didn't read this news either:Chinas economic growth faces challenges:http://www.time.com/time/business/article/0,8599,1582477,00.html Reply
Jan 30, 2007 7:53 PM Ann All Ann All  says:
Sorry for the confusion. To clarify, I was talking about the outsourcing market and not the overall economy. As you'll note from the article linked to within the post, the 36 percent figure comes from an analyst firm. As most folks know, these research numbers tend to vary slightly -- and sometimes more than slightly -- depending on the source. I am also aware that China faces many hurdles. I mentioned a few -- though admittedly didn't give them a lot of ink. We have some older articles to that effect in our archives, but we prefer to link to newer content when possible. Thanks for keeping me on my toes. Reply
Jan 30, 2007 8:40 PM Balaji Viswanathan Balaji Viswanathan  says:
>> Chinese developers are more creative thinkers than their Indian counterpartsMany other companies think otherwise, and without hard facts, such assertions have no meaning. If they had found a lot more Chinese creative writers, by now most of the top level work should have moved to China!China is growing faster in outsourcing due to the much smaller base. In most IT sectors, China's size is a fraction of India's and all its top 50 companies put together is smaller than TCS or Infosys in Market Cap & Revenues.The biggest issue that will curb Chinese outsourcing market is the local development. When India started growing there was nothing in the country but IT. So, all the talent moved to IT and for a 5th grade work, Indians could pay for Harvard level skills. But, now India is facing pinch as other sectors are also growing and paying well, putting upward pressures on salary. In China, which is even more developed, most of the top talent can easily find home in many other progressive sectors and IT can never succeed as it did in India in 1990s.The sad thing about China is its superfast growth will itself become its villian in a decade's time, when the wages at top level work will grow on par with the West & labor market will saturate due to one-child policy,  while still having a per-capita income a fraction of the West.      Reply
Jan 31, 2007 3:05 PM Harpreet Harpreet  says:
The growth is of the Industry and not of China, at US$ 4 billion it is easy to grow @ 36%.  India is at about US$ 36 billion for the fostware Industry and growing at about 25% ( which means Also China has domestic and neighbourhood software requirements that help it grow, as these do not need english language requirement. However Eastern Europe and Russia would be a big foil for China's growth in the European non English market, and it still remains to be seen if China can grow in supporting outsourcing for North America, without these two markets one doubts if the Chinese can continue this growth rate.Even if one assumes that China continues to grow at this pace, and India's ( currently growing at 30%) growth rate declines, China would not be able to equal the Indian Industry . Sure it would be larger than now, but it would still be less than half of the Indian Industry's size in a decade Reply

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