The Hindu Business Line : China not a threat to India in offshoring, says Forrester

Bangalore May 25 Despite Government backing, China's offshore role is developing slower than expected, according to technology and market research firmForrester.

Given the slowing offshore momentum, firms that think China could be a quick fix for rising costs and attrition in other offshore locations would be sorely disappointed, Forrester said.

China needs to refocus its offshore efforts, said Forrester's Vice-President, Mr John McCarthy, in a report titled "China's Diminishing Offshore Role".

China's percentage of overall offshore resources has dropped and other countries are growing at a faster rate, the report said.

"When we first looked at China's offshore and global delivery model (GDM) role nearly two years ago, the country was widely viewed as the key challenger to India for offshore supremacy. However, our latest research shows that to date, the market has not taken off as expected. While there continues to be demand from Japan and multinationals with operations in China, the offshore business from the US and Europe has been slow to materialise," said Mr McCarthy.

Capability focus

Instead of trying to compete in areas like applications development and management — where India clearly dominates — China should be encouraging local firms to build out their capabilities in areas like testing, data management, and product development services, Mr McCarthy said.

Similarly, for offshore firms with large bases in India, Mr McCarthy recommended they should look at other locations to diversify their offshore exposure.