2006-05-11

Outclassed by China in Outsourcing

Which is the world's favorite outsourcing destination? India? Forget it.It's mainland China.

India has been thumping its chest and proclaiming itself as the king of the outsourcing world except that China has quietly stolen the crown.

A survey carried out recently by global consultancy firm Grant Thornton busts a lot of the myths that surround global businesses. The $36-billion Indian outsourcing industry isn't the top dog anymore.

The survey says close to 31 per cent of the global businessmen have already transferred or are planning to transfer operations to China. India comes next with 27 per cent, followed by Mexico (8 per cent) and Malaysia (5 per cent), the survey said.

India trails China on a large number of parameters save one: optimism. The survey says business owners in India 93 per cent of the respondents are the most optimistic about the outlook for the country's economy over the next 12 months. Mainland China trails at number four.

But the hay has already turned into gold just next door: to begin with, nearly one in five medium-sized businesses now import from mainland China. More than a third of mid-sized businesses in NAFTA (US, Canada and Mexico ) and East Asia said they perceive China both as a threat and an opportunity.

Almost 18 per cent of the respondents perceived China to be the biggest opportunity, while only 3 per cent considered India to be a big opportunity, says the report.

Not only that, 34 per cent of the business owners surveyed in the US considered China as a great opportunity compared with 6 per cent who considered India as hot. And the bad news for India doesn't end there. Close to 11 per cent of the UK respondents voted for China compared with 2 per cent for India. The global average stands at 18 per cent for China and 3 per cent for India.

The Chinese also believe a lot more than the Indians in Brand China as just 9 per cent of Chinese business owners have plans to import from India compared with 27 per cent of Indian businessmen who have plans to import from China. And this is not just restricted to the two close neighbours. While 31 per cent of the surveyed US businessmen have plans to import from China, the number dwindles down to just 19 per cent when it comes to India.

The percentage of business owners in most of the 30 countries surveyed exporting to China or having plans to export to China is much higher than compared to India, says the survey report.

The improving transportation, the enforcing social stability, and the constantly established policys are all making the company outsoucing in China benefit more.

Source: www.freeborders.com

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