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24 x 7 Call Centers in India Continue to Excel !!



Chinese software outsourcing firms are unlikely to catch up with Indian 24 7 call centers and other global software services firms anytime in the near future, despite a major policy push towards outsourcing from China’s central government in recent years, according to a new study by a top US-based business school. Indian service call centers have created a niche for themselves in the Outsourcing arena. 
In a study, titled Providers in China and USA: Preliminary Comparison, Arie Y. Lewin, a professor at the Fuqua School of Business, Duke University, says Chinese firms are struggling to make an impact in the global IT services market at a time when the industry is fast reaching saturation point amid severe competition among global and Indian Inbound Outbound Call Center.
“It’s been very hard for Chinese outsourcing firms to break into the top; it’s partly not their fault because the timing was wrong,” Lewin said in a telephone interview. “They’re not trying to take the share away from a growing market; they’re trying to take away share from existing players, which is much more difficult.”
Global IT spending is expected to touch $3.7 trillion in 2013, according to technology researcher Gartner Inc.
Lewin also pointed out that the language barrier has also played a huge role in China’s inability to attract large outsourcing contracts at a time of increasing commoditization of IT services. “They are not realizing that English competency is a big problem,” Lewin said.
According to the survey, 79% of IT services firms in China have been in business for less than 10 years. On the other hand, top US and Indian IT firms have been around for the better part of the last three decades, in some cases, even longer.
Lewin’s study, which surveyed more than 250 Chinese firms, was jointly conducted with Shanghai Jiao Tong University professor Liu Yi.
Lewin said China has also faced the problem of attracting the best talent, with the country’s engineering graduates not looking at IT services as a primary option for employment, instead focusing more on manufacturing firms. China currently trains 1.1 million engineers annually, according to a recent report by Kotak Institutional Equities. Since 2006, the Chinese government has tried to build expertise in software outsourcing. It identified 20 cities where such firms could be developed.
In 2009, it also put in place a national initiative to encourage the country’s outsourcing industry, with an estimated size of $50 billion, according to Lewin. India’s is bigger at $108 billion, according to industry lobby Nasscom.
“Despite ambitious global growth plans, Chinese ITS (information technology services) providers have largely failed to articulate a compelling value proposition to US and European clients,” said Frederic Giron, principal analyst at Forrester Research Inc., in an email response. “By focusing mainly on low-end application development services, they have instead primarily competed with much bigger and much more experienced Indian providers—but without the ability to offer lower costs.”
The average profitability of Chinese IT services firms went down from 10-15% to less than 5% over the past two years, while that at most large Indian firms was in the 15-25% range, Giron at Forrester said.
This has led to top Chinese IT services firms going private, most notably Yucheng Technology, AsiaInfo-Linkage, Camelot and Pactera—all of which went private within the last one year.
Experts say China’s focus on the domestic market and Japan may have hindered its ability to gain market share in other growing economies.
“Also, unless you have a global delivery capability, you will not succeed, and China lacks that,” said Sid Pai, partner and president, Asia-Pacific region, at Information Services Group, an outsourcing advisory firm.
“In northern China, you had a very thriving (outsourcing industry), but they were serving Japanese or Korean companies—that was a model that could not expand to compete with Western competitors,” Lewin said.