Brian Schwartz has a well-researched article in the March 2009 issue of China International Business Magazine on the development of China’s IT services outsourcing industry. He asked me some of my thoughts on the topic for the article, one of which involves the relationship between the Indian outsourcing platform and the Chinese. I responded in the article by saying:

The Indian government is continually having difficulty rationalizing a business sector capable of capitalizing on the outsourcing services in its own backyard…

Certainly, two things I’ve been struck by in the global financial downturn is the sheer number of Chinese IT service providers that keep on keeping on: they have made it plain they are not going to close shop any time soon. Though far smaller than their Indian counterparts, they are eagerly moving up the customer-service learning curve while keeping costs low.

The other interesting point is the very reason behind the staying power of Chinese IT-service vendors: they have a domestic market that is increasingly becoming rationalized. Rationalized in this context means that local regulations, transportation and information infrastructures, staffing levels and more are well enough mature in China that IT services companies can actually get to and support customers in a somewhat timely and effective manner.

Until India has this kind of domestic customer base, it will always be at the mercy of the international markets that have caused massive layoffs of staff at their outsourcing facilities, salary deflation and customer flight to competing countries – like China.

Email me… your name, company name, industry and country in which you are working to get a PDF copy of the article.