China will Overtake India in Offshoring by 2011: IDC

IT research vendor IDC has developed a new Global Delivery Index, which forecasts that Chinese cities will overtake Indian cities like Bangalore and Mumbai in offshoring by 2011.

Currently, Indian cities are highly ranked with Chinese cities said to be nipping at India’s heels.

According to IDC, Bangalore is presently the #1 offshoring destination followed by Manila, New Delhi and Mumbai.

But when IDC’s Global Delivery Index looks at future plans of cities such as infrastructure programs and efforts taken to lay a firm foundation for attracting investments, the picture becomes gloomy for Indian cities.

The Global Delivery Index compares 35 cities in the Asia/Pacific as potential offshore delivery centers, based on criteria such as cost of labor, cost of rent, language skills and turnover rate.

IDC’s conclusion does not bode well for India:

Chinese cities will overtake Indian cities by 2011 due to massive investments made ( e.g. infrastructure, English language, Internet connections, technical skills, etc) which are favorable towards offshoring.

IDC’s findings are hardly surprising since successive governments have hardly done anything to improve the overall infrastructure in Indian cities like Bangalore.

Bangalore suffers from serious infrastructure problems like lack of electric power, severe traffic bottlenecks and absence of widespread broad Internet connectivity.

When you add wage inflation running at 50%, IDC’s forecast seems more likely than not to materialize.

If the past offers any indication, it’s that India’s selfserving leaders in Bangalore, Mumbai, Hyderabad, New Delhi and Noida are unlikely to do much to prevent the goose that lays the golden egg from being killed.

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