Has the rapid rise of China created the perfect environment for offshore IT services?

The Chinese economy might have slowed a bit during the current economic conditions but it has exploded in recent years.

China is the world’s powerhouse today and heading towards world domination.

Usually when a nation develops everything becomes expensive. Less developed countries can undercut them and provide lower cost services, but not necessarily lower quality.

India for example is becoming more expensive when it comes to providing IT services. This is because the growing middle class in India want more luxuries and require higher pay to get them. In a democracy it is difficult to stop this happening.

But China is different. It has a command economy, which although is the source of most of the criticism of the Asian giant could actually be its trump card. Human rights in China are not good and I am not suggesting that being a command economy, where the government controls everything, is ideal but that it will prevent the prices going up.

China has millions of well educated people and for example creates 350,000 computer science graduates every year. These workers are on very low salaries even compared to India, where low cost labour is a large part of the attraction to companies offshoring IT work there.

Most large multi-national businesses also want to get a piece of the China opportunity. Getting into China through a service provider could be a way to do this. I spoke to David Chen, president at VanceInfo, a couple of years ago. He said that multinational businesses based in the west, such as banks and retailers, are all trying to get into the Chinese market. He says that because of the challenges breaking into China it would be an advantage for these businesses to contract Chinese service providers to support them.

But China’s treatment of citizens is cited as a reason not to buy services there. There is also a big question mark over its Intellectual Property laws.

But the command economy could mean that China becomes the world’s strongest economy but at the same time the cost of services it provides to overseas businesses remain the cheapest available.

I have been running a poll in this blog to get people’s views on offshoring to China. I simply asked, whether people would offshore to China?

So far I have had 61 people contribute. A total of 49.18% said they would not offshore IT to China 40.98% said they would and 9.84% said they have never considered it.

Please add your view in the poll below.

Would you offshore your IT to China?

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