India and China: which will be the outsourcing powerhouse in the 21st century?
Discussions surrounding offshore delivery locations and where they should be situated quickly boil down to debating the relative merits of India and China. The major progress on the back of capital investments, inflows, and export successes these countries have received over the past decade has placed them on the radar of any prospective offshore delivery location investor. This focus has increased in the past two years, given the two countries’ apparent insulation from the economic storm that impacted the rest of the world.
This report assesses some of the key factors that have put these two countries in their current positions. It considers what is driving their apparently insatiable growth as delivery locations, discusses some of the main players active in these markets, analyzes their comparative strengths and weaknesses, and examines possible futures and areas of opportunity.
This report assesses some of the key factors that have put these two countries in their current positions. It considers what is driving their apparently insatiable growth as delivery locations, discusses some of the main players active in these markets, analyzes their comparative strengths and weaknesses, and examines possible futures and areas of opportunity.
SUMMARY
Impact
Ovum view
Key messages
MARKET OPPORTUNITY
Both are becoming more popular as the levels of investment increase
IBM
HP
Accenture
Capgemini
Wipro
TCS
Delivery locations are expanding
Which country?
Within country
Growing centers of power
Factors driving growth in the Chinese and Indian IT sectors
Geography
Language and education
Technical capabilities and skills
Economic factors/growth
Labor cost
Stability
Government incentive
Client demand
COUNTRY STRATEGY
Understanding the fundamentals
Strategy, structure, and rivalry
Factor conditions
Demand conditions
Related industries
Governmental role
COMPETITIVE LANDSCAPE ANALYSIS
Embedding “localness”
US giants do not dominate local markets as they do elsewhere
The Indian global providers are expanding out of their traditional markets
Non-US multinationals are investing, but often playing catch-up
Locals struggle to make an impact
Disrupters
GO TO MARKET
Level, depth, and breadth
Vendors considering market entry or expansion
Global delivery networks
Access to low-cost, high-quality resources
Nearshore
CHALLENGES REMAIN
Access to affordable skills and talent management
Cultural conflicts
Intra-country locations
Security and stability
Urbanization and core infrastructure
RECOMMENDATIONS
Recommendations for enterprises
Ask the question
Consider what you are comfortable with having delivered from these locations
Shop around
Recommendations for suppliers
Define the main reasons for entering
One size does not fit all
India or China? It’s more likely to be India and China
APPENDIX
Methodology
Impact
Ovum view
Key messages
MARKET OPPORTUNITY
Both are becoming more popular as the levels of investment increase
IBM
HP
Accenture
Capgemini
Wipro
TCS
Delivery locations are expanding
Which country?
Within country
Growing centers of power
Factors driving growth in the Chinese and Indian IT sectors
Geography
Language and education
Technical capabilities and skills
Economic factors/growth
Labor cost
Stability
Government incentive
Client demand
COUNTRY STRATEGY
Understanding the fundamentals
Strategy, structure, and rivalry
Factor conditions
Demand conditions
Related industries
Governmental role
COMPETITIVE LANDSCAPE ANALYSIS
Embedding “localness”
US giants do not dominate local markets as they do elsewhere
The Indian global providers are expanding out of their traditional markets
Non-US multinationals are investing, but often playing catch-up
Locals struggle to make an impact
Disrupters
GO TO MARKET
Level, depth, and breadth
Vendors considering market entry or expansion
Global delivery networks
Access to low-cost, high-quality resources
Nearshore
CHALLENGES REMAIN
Access to affordable skills and talent management
Cultural conflicts
Intra-country locations
Security and stability
Urbanization and core infrastructure
RECOMMENDATIONS
Recommendations for enterprises
Ask the question
Consider what you are comfortable with having delivered from these locations
Shop around
Recommendations for suppliers
Define the main reasons for entering
One size does not fit all
India or China? It’s more likely to be India and China
APPENDIX
Methodology
LIST OF TABLES
Table 1: Chinese and Indian urbanization (population in urban centers and percentage of total population)
Table 2: Investment for growth in India and China
Table 3: India and China in-country tiering
Table 4: India and China country comparison, Porter’s Diamond of National Advantage factors
Table 1: Chinese and Indian urbanization (population in urban centers and percentage of total population)
Table 2: Investment for growth in India and China
Table 3: India and China in-country tiering
Table 4: India and China country comparison, Porter’s Diamond of National Advantage factors
LIST OF FIGURES
Figure 1: GDP growth rates by country, 1Q10
Figure 2: Exchange rates (percentage against the US dollar)
Figure 1: GDP growth rates by country, 1Q10
Figure 2: Exchange rates (percentage against the US dollar)
