Chinese cities are expected to unseat Bangalore, Mumbai, and Delhi in India, and Manila of the Philippines, as favoured offshore delivery centres by 2011, according to analyst IDC.
The market researcher has introduced a new Global Delivery Index (GDI), which compares 35 cities in the Asia-Pacific region as potential offshore delivery centres, based on criteria such as cost of labour, cost of rent, language skills, government policies, infrastructure, and staff turnover rates.
Bangalore currently tops the list, followed by Manila, Delhi, and Mumbai. The Chinese cities that figure in the 2007 list include Dalian, Shanghai, and Beijing, at number five, six, and seven.
Indian cities have inherent challenges such as cost of staff and pressure on infrastructure, said Conrad Chang, a research manager at IDC’s Asia Pacific operations. While India has focused on the US and European markets, China has large opportunities in the Japanese and Korean markets, Chang added.
Chinese cities will overtake Indian cities by 2011 because of massive investments made in infrastructure, English language, internet connections, and technical skills, which are favourable towards offshoring, IDC said.
Forrester Research however takes a less optimistic view about China as an offshore destination.
Nearly two years ago, the country was widely viewed as a key challenger to India as an offshore services delivery location, however Forrester's research shows that the market has not taken off as expected, the research firm said in a recent report.