The Chinese BPO dragon is just waiting in the wings! It appears that in the last five years, Chinese BPO efforts have been gaining ground and poses some real threats to the India BPO industry. It doesn't mean that all customers are going to switching to China tomorrow, but they are chipping away at those areas that make sense for companies to outsource to China rather than India!
China in the Asian Outsourcing Market
is a very interesting white paper from Tholons Globalization Review.
It specifically talks about the rampup of BPO services that China has been able to do in multiple cities like Dalian for services that make a lot more sense for customers in Japan and South Korea, for example!
Tholons argues that because of the cultural and linguistic similarities between Mandarin, Korean and Japanese languages, a number of companies find it easier to outsource certain kinds of IT and ITES work to China rather than to India.
In another blog entry, All BPO Processes are not created Equal... Some are more equal than...
, I argued that segmentation of processes based on linguistic and technical skills may mean some processes are just as easily done in China as in India, but only less expensively.
The above example is another instance where another segment of IT and IT enabled services may be more suitable for outsourcing to China rather than India.
These kinds of erosions are inevitable. Cameras in the world used to be manufactured in Japan. Now the most expensive ones are still manufactured in Japan, lesser ones in Taiwan and much less expensive ones in China.
Indian IT may be safe for a long time but Indian IT Enabled Services is where this kind segmentation based erosion will start to happen. Indian BPO companies better be prepared to shore up existing segments and find new ones and shift more to knowledge based ones like Financial Research, Market Research, Legal Process Outsourcing, Engineering Design Services, etc. These also offer a better and interesting career paths to employees and may be win-win overall from all points of view.
Something to think about and pay attention to!