China to overtake India in offshoring by 2011

SILICON VALLEY: Mumbai and Bangalore may be favourite offshoring destinations as of today but Chinese commercial hubs like Beijing and Shanghai are all set to overtake the Indian cities by 2011, a study has said.

According to an IDC study, although Indian cities rank at the top in the Global Delivery Index (GDI) today, Chinese centres are fast coming up, and are expected to soon overtake them as the preferred offshoring centres.

The change will happen thanks to massive investments in infrastructure, English language, Internet connections, technical skills etc provided by Chinese cities, which are the factors favourable for offshoring.

The current top 10 cities in the Asia-Pacific region, are Bangalore, Manila, New Delhi, Mumbai, Dailan, Shanghai, Beijing, Sydney, Brisbane and Auckland.

The Index, comparing 35 cities in the Asia-Pacific region as potential offshore delivery centres, includes 30 criteria, including labour and rental costs, language skills and turnover rate.

Cities covered by the index include Adelaide, Dalian, Bangalore, Hanoi, and Kuala Lumpur.

Conrad Chang, Research Manager for IDC's Asia-Pacific BPO Research, points out that although in 2007, Indian cities scored high on the study's criteria, the Chinese cities of Beijing, Shanghai and Dalian could change the picture in four years.

"There are different risk factors to consider when evaluating outsourcing, offshoring, onshoring, and nearshoring. Some factors are obviously more critical than others and the GDI takes that into consideration," says Conrad Chang.