Outsourcing and China

The Economist writes that China is starting to catch up.

India has captured the bulk of this work. While China is the world’s top location for contracting out manufacturing, it has just $2 billion of the outsourced-services market, reckons Bill Lewis, the founder of Temasys, a Singapore-based consultancy. What activity there is happens mostly in Dalian, a north-eastern city where, for reasons of history and geography, many locals speak Japanese and Korean, and which therefore handles back-office functions for companies from Japan and South Korea. Xian’s annual outsourcing revenues are a tiny 300m yuan ($40m), according to official figures. Over 90% of that comes from Japan.

But China has plenty of potential. Its workers are well educated in basic computing and mathematics. They may lack creativity, but they are disciplined and readily trained, making them better at tedious jobs than most Indians are. This suits the BPO business. These are repetitive, rules-based tasks which you can train an army of people to do, says Sujay Chohan, Gartner’s research director. They are not tasks that require innovation.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.