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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (1029)	10/20/2003 10:59:45 AM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

INTERVIEW: Cisco China Deal Threatens India Outsourcing By Phelim Kyne Of DOW JONES NEWSWIRES BEIJING (Dow Jones)--A Cisco Systems Inc. (CSCO) technology support outsourcing deal with Beijing-based Information Technology United Corp., or ITUC, suggests that China may eventually rival India's dominance in the global outsourcing market, an ITUC executive said Monday. ADVERTISEMENT China's technology support outsourcing capacity is increasingly more competitive than India's both in terms of costs and English-fluent staff, ITUC's chief executive officer Cyrill Eltschinger told Dow Jones Newswires. "India has had a 10-year head start...(but) the China market is the growing challenger in the global technology outsourcing (market) worldwide and you are going to observe a gradual migration (of outsourcing) into the China market away from India," Eltschinger said in an interview. Cisco has contracted ITUC to provide technological support for both China-based and overseas Cisco staff depending on schedule times and overflow capacity from existing Cisco call centers in cities including San Jose in the U.S., Amsterdam in the Netherlands and Sydney, Australia. The outsourcing services will begin Wednesday as part of a three-to-six month trial involving six ITUC staff based in Cisco's Beijing offices. The scale of the outsourcing will likely grow "significantly" after the trial period, Eltschinger said, without elaborating on the financial value of the deal. Eltschinger is currently negotiating as many as three similar contracts with unnamed Fortune 500 companies. "This could easily become 20%-30% of what we may be doing in the next 2-3 years," he said. ITUC is a privately-held British global technology solutions provider. English Proficiency The Cisco-ITUC deal is an example of how China is transforming itself from a source of low-cost labor to a competitive supplier of higher-skilled information technology professionals that have been traditionally supplied by India. While India's history as a former British colony left a legacy of English-language proficiency, the linguistic capabilities of China's information technology professionals are as good or better, Eltschinger said. "Most people have been under the impression 'Let's go to India because they speak better English'," he said. But that argument ignores the advances made by Chinese government initiatives to raise the English-language standards in key economic sectors including information technology, Eltschinger said. China's inroads into global technological support outsourcing are also a testament to the country's competitive costs and high technology infrastructure. "Hiring resources in first-tier cities like Beijing and Shanghai (are) not much cheaper than rates offered by Indian companies...but definitely competitive," Eltschinger said. China's provincial cities offer much lower labor costs and ITUC has set up a development center in the city of Xian in the western province of Shaanxi to provide global outsourcing services 10% to 15% less expensive than India's. Eggs In More Than One Basket India's success in attracting global technological support contracts for international companies seeking lower-cost assistance in programming using Common Business Oriented Language, or COBOL also faces an uncertain future. International companies will phase out the use of COBOL-based programming within the next five years, removing India's longtime competitive advantage in that area, Eltschinger said. To be sure, India won't simply give up that edge without a fight. But international companies are also increasingly looking to diversify their outsourcing to different regions as a way to prevent service interruptions from centralizing operations in one country. "Now most companies are aggressively looking at different ways of leveraging (risk) and not having their eggs in one basket, so strategies for the future may include companies having partially outsourced scenarios in (both) India and China," Eltschinger said. sg.biz.yahoo.com