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Issue Date: October 2007

China and India are global outsourcing powerhouses

18 October 2007

The global shared services (SSO) is showing a vibrant increase as is the overall business process outsourcing (BPO) sector, which is expected to reach an estimated value of $146 billion by 2008. As these markets grow it is clear that China and India are the giants in this domain - and, indeed, across a spectrum of economic activities.
This is according to Neels van Tonder, CEO of domain specialised outsourced software developer, UCS Software Manufacturing, part of the JSE Securities Exchange listed UCS Group.
Van Tonder said a recent study by global consultancy, Frost & Sullivan, suggests that the worldwide SSO market was worth $930 billion in 2006. This is expected to grow at a compound annual growth rate of 15% for the next few years.
"There is certainly buoyancy in the overall outsourcing market. Interestingly the latest research shows that, in the SSO market space, India remains the dominant force. Behind India comes China, Ireland, Singapore, Malaysia, Mexico, Czech Republic, Poland, the Philippines and Canada. There is certainly a chance for South Africa to become a player in this market, but we are not yet up there with the big guns," said van Tonder.
He said that to stay competitive in the global economy it is now imperative that IT organisations implement a 'Chindia' strategy. "These two countries are currently altering the economic landscape, including in outsourcing. In fact, these two countries are changing the very future of technology."
Gartner agrees, saying recently that by 2008 China will very likely generate intellectual property at a rate comparable to developed countries. It is expected to surpass the United States as the population with the largest English capacity But, in terms of language comprehension and proficiency, China will 'remain a challenger, not the global leader'.
"The dual surge of China and India is mesmerising world markets. Strangely, many people still do not realize the impact they are making - and are still going to make. At the same time both countries are often seen as leaders by default; because there is a notion that they are doing so well because they are a source of cheap labour. But this is no longer true. Both are 'upskilling' and are increasingly competing on a global level - even in terms of complexity and quality. We see this in the software development and outsourcing market. They are the powerhouses - and their strength will continue to grow for the foreseeable future, despite claims by the anti-India block that it is fast-approaching severe capacity problems, certainly when it comes to IT."


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