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China set to take outsourcing crown

David Ramli and Paul Smith (Australian Financial Review) | April 12, 2011
The next time you get an annoying telemarketing call in the middle of dinner, it could be coming all the way from China.

The director of consulting agency Mindfields, Mohit Sharma, said there was no direct outsourcing to China from leading Australian organisations, but work on some of their accounts was being conducted in China through existing outsourcing deals.

The battle between China and India was heating up, but currently there were no big Chinese originated IT organisations that could match the scale and skill level of multinational and major Indian IT companies.

"There are a few state-owned Chinese IT organisations but they are catering for the domestic market rather than looking to serve outside China," Mr Sharma said.

He said that while the best Indian outsourcers had grown organicallyover a number of years, the best strategy for newer Chinese rivals would be to grow through acquisition to compete.

"Current valuations of Indian IT companies are artificially inflated, making them unattractive for acquisition by Chinese companies, but in the medium to long term, acquiring Indian IT companies at decent valuation would be a good move for leapfrogging," he said.

China is eight years behind the curve, and while they don't have the maturity
level yet, they are absolutely getting there.



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