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China is rapidly emerging as one of the world's leading suppliers of offshore software outsourcing services. It has all the right ingredients to be a preferred software outsourcing destination; the world's largest educated labor pool, world class infrastructure and government backing.
Large and growing labor market of skilled software professionals
The primary driver behind China’s emergence as a software powerhouse is its large and growing labor market of skilled software professionals. To get a sense of the size and growth of this market, consider that China, a country of 1.3 billion people, produces 350,000 graduate engineers every year, compared with 90,000 for U.S engineering schools. In addition, most of the world’s largest IT firms, including Microsoft, IBM, Oracle and Sun are working with the top Chinese universities to set up cooperative software engineering institutes.
Infrastructure
Infrastructure is another critical factor when deciding where to outsource. Inside the country, China is rapidly developing its voice and data networks with the world’s largest wireless network and fiber optics reaching the most remote areas. Between the U.S and China, Internet speeds can be experienced similar to what is available within the U.S and between the U.S and India.
Chinese Government Support
The Chinese Government support is proving critical to putting China on the software outsourcing map. In addition to investing heavily in developing a skilled workforce, the Government is providing tax breaks and incentives to software outsourcing companies setting up operations in China or improving their capability. Service providers receiving CMM Certification were awarded grants by the Government.
India is overheating
Attractive alternative to India where overwhelming demand makes it increasingly difficult to access quality resources. There is a widening gap of software outsourcing in India between supply and demand. The increase in demand remains but there is a dwindling talent supply and a hike in prices. As a result, quality is suffering. With the present rate of demand it also appears unlikely that India can overcome this issue, in the short term.
In 2006, the Ministry of Commerce launched the “Ten-Hundred-Thousand Project” for service outsourcing in China
Object of the project by the year 2010;
To build 10 service outsourcing base cities of certain international competitiveness;
To promote transfer of service outsourcing businesses of 100 world-known multinational companies into China;
To cultivate 1000 medium and large-scale service outsourcing enterprise with international qualifications;
To quadruple the sales of service outsourcing exports the basis of that in 2005.
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