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Wednesday, September 26, 2007

The Changing Trends

The CIO Magazine shootout on offshore services finds India more attractive as an offshore destination than China. Yet another survey echoed similar sentiments. For me beyond a point location does not matter- it is only people, process and program management that matter – I guess the survey’s conclusion in some forms has been influenced by these factors as well.

A survey by Capgemini and ProLogis, a global leader in industrial real estate, suggests that India could challenge the position of China as the manufacturing center of the world in the next three to five years.

Today China is the preferred location for offshoring manufacturing activities while India has been the preferred location for IT, finance and customer service. On the other hand, companies are planning to offshore manufacturing activities primarily to India, over the next 3 to 5 years. One key factor noted in the study is that some of the main manufacturing locations in China are becoming too expensive relative to other countries in the region, which includes India.The study also reveals, offshoring activities to China and India has had limited impact on the corresponding Western operations. Any more switch would happen only when the transition pain becomes lesser than sustenace pain.By looking at the overall average of the activities, the closure rates of the corresponding Western facilities is about 10% and the percentages varied significantly between China and India and are dependent upon individual activities.

Well after all offshoring business is not a zero sum game and growth and volumes makes any comparison a subjective/contextual exercise but clearly growth of the offshoring business is becoming more and more of a centerpiece in every growing business and it is a win-win for all the players.

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