China has most of the crucial ingredients necessary to succeed as a destination for offshore BPO and ITO, but it’s currently better suited to serve Japanese and South Korean enterprises. The lack of quality English-language skills, the high cost of Internet connectivity, inadequate service levels and workforce immaturity make China unsuitable for high-end BPO work for U.S. and European enterprises. English language skills and Internet connectivity play a different role in ITO; although they still must be improved in China, they’re sufficient to service Western companies. The workforce is rapidly maturing and some of the larger Chinese ITO service companies are winning deals approaching those of their Indian counterparts. Involvement in China from larger Indian BPO and ITO companies is accelerating the maturation process for Chinese BPO and ITO. Predictions
Although not yet mature, China will become a formidable force in the global ITO and BPO marketplace by 2009. Recommendations
Japanese and South Korean companies should thoroughly explore BPO and ITO service opportunities in China. For BPO, Western companies should evaluate China only as a secondary destination for transaction processing, or as a low-cost destination for their Japanese or regional back-office operations, in the near term. For ITO, Western companies should consider China as an alternative to India, as a primary or a secondary location. However, China should be measured equally to Indian competitors based on its unique characteristics.