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Look Out India: China is Gaining on You

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India may be today's hot IT outsourcing destination, but China is looking to give it a run for its workforce.

Gordon Brooks, CEO of application management and outsourcer E5 Systems Inc., recently told attendees at Computer Digital Expo's Enterprise IT Week conference that demand for IT workers in India will begin to outpace supply, driving up outsourcing costs there.

And, as workers in India become more in demand, it will get more difficult to maintain employee continuity. He said workers in India will be able to leave their jobs for better-paying ones as often as every six months.

As a result, outsourcers will be looking for the next best cheap spot to farm out their IT operations. And one prime location appears to be China.

It currently has 400,000 IT specialists, which is 200,000 fewer than India. And, as many as 50,000 new workers are expected to join China's workforce annually. As a result, cost-per-worker numbers will remain low in China for the foreseeable future.

"In this massive onslaught of offshore outsourcing," Brooks reportedly said, "I don't think any [nations] other than China and India will become large outsourcing centers."

He sees a parallel from more than a decade ago when his company began outsourcing to Ireland. Now labor is much cheaper in China, India and other countries like Russia.

Brooks is not alone.

International Business Machines Corp. Chief Executive Officer Samuel Palmisano recently said he expects 13 million jobs to be created in the next two years around the world, including in rapidly developing countries such as China, India and South Korea.

What about the Philippines? Brooks played down that potential market, noting that its small labor pool of 10,000 IT workers will quickly cause a labor shortage there.

"IT outsourcing is about fortune telling" to some extent, Brooks said. "You have to ask, 'Where can I get a sustained, long-term value?'"

Though some job losses are inevitable, Brooks said international IT outsourcing ideally will help companies better utilize U.S. workers.

"Our people don't want to [be charged with maintaining] older, less-valued systems," Brooks said. "They want to do the new stuff."

In fact, he said it's likely that many of today's U.S. IT workers will wind up playing roles where they communicate with international workers and ensure that their projects are successful because it's easy for offshore outsourcing projects to fail.

"IT staffs are going to have to develop their own processes," for making international outsourcing work, Brooks said. "IT people are going to become more like business integrators."


 
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