India as offshoring hub may lose out to China
London, July 5:
India continues to be the global offshoring hub but is likely to lose its share of two-thirds of offshored staff in the next 10 years due to stiff competition from China, according to a report by consulting firm Deloitte.
The report, ‘Global Financial Services Offshoring Report 2007’, states that offshoring is saving the financial services industry an estimated £4.5 billion a year, up from around £2.5 billion a year ago, propelled by an 1,800 per cent increase in headcount over the last four years. The UK financial services industry alone saves up to £1.5 billion per year from offshoring, most of it to India. “India remains offshoring’s hub but is likely to lose share in the future. The DTT GFSI group estimates that about two-thirds of gl-obal offsho-red staff are employed in the sub-continent.
China threatens to be India’s principal offshoring competitor. Some 200 million Chinese people are currently learning English, providing a growing pool of skilled labour that may compete with India over the next 10 years. China’s share of offshored labour is already rising, with a third of financial institutions now having back-office mainly IT processes based in China.
“China’s growing competitiveness may dampen sal-ary inflation among Indian offshoring industry workers.
Only 10-15 per cent of Indian graduates are considered suitable for direct emp-loyment in offshoring indu-stry. This may result in a sh-ortfall of up to half a million professionals by 2010.” Chr-is Gentle, associate partner, financial services, author of the study, said, “Offshoring is maturing at a rapid pace but, in future, the best offshoring strategies will not be based on arbitrage.