The Indian Economy Blog

February 22, 2009

Weekend Reading: 21 Feb, 2009

Filed under: Basic Questions,Business,Outsourcing — Prashant @ 9:06 am

China threat to Indian IT: a piece in the FT talking about how China may well pose a threat to India’s outsourcing industry, esp given the incentives given by the Chinese government

The blogs that barked: How the blogosphere outed the Stanford fraud (in the US and in the Caribbean) before the SEC or mainstream media did. Question for readers: are there any instances of bloggers outing corporate or government fraud in India before the regulators or mainstream media?

If you’re a whistleblower in India and disillusioned by the lack of checks and punitive action, Harry Markopolos’s travails in his attempt to unmask the Madoff Ponzi scheme might sound familiar


  1. Ironically, Indian IT companies are playing a key role in China’s ascendancy as an IT services destination and its growing challenge to India’s supremacy in the sector. Satyam, before its recent troubles, was ramping up to make its China development facility in Nanjing its largest center outside of India. It still may, even under new ownership. Similarly, TCS and Infosys are staffing up rapidly in China, aiming to serve multinationals with significant presence in the country. The need to secure more competitive wages and be closer to clients is driving this build-up. I believe that this is good for everyone – It helps these companies maximize profits by winning new clients and paying staff salaries that are lower than that of Indian IT professionals. It also makes them scale up the IT services value chain to areas where the Chinese cannot effectively compete, which in turn allows them to charge higher prices and become more profitable. Finally, it helps the Chinese develop economically and become further engaged with international clients, business practices, and rules / regulations.

    Pramod Bhasin in the FT article argues that China poses a real threat to India’s IT dominance because the Chinese government is investing heavily in the sector and can execute more effectively than the Indian government. This may be true, but I believe the Chinese will succeed also because they are coming to the table very willing to learn from their Indian and other international counterparts. I recently advised a Chinese retailer on implementation of a new merchandising management system. Our systems integration partner was a large Indian IT services provider, with its team comprised of Indian project managers and Chinese staff consultants. Of course, the Indian managers had more technical knowledge and experience in project management and developing client relationships than the Chinese. However, I found the Chinese consultants to be keenly aware of how much they had to learn and with a sense of urgency to improve all facets of their game. So, I think the Chinese will continue to close the gap with India in IT services, not only because they have the money but also the attitude.

    Comment by Suresh Dalai — March 4, 2009 @ 8:08 am

  2. I believe the outsourcing concept would move towards “nearshoring”. In nearshoring China will become a sure competitor, whenever outsourcing contract happens from countries like Singapore, Japan, Hongkong, Korea.

    Please visit my discussion at

    Comment by guharajan — April 4, 2009 @ 9:52 pm

  3. I don’t agree with the view that China may pose a threat to India’s outsourcing industry, yes I accept the fact that it is emerging as a great source for outsourcing but the trend of getting the services outsourced is increasing at much faster pace. So, there would be no shortage of orders for Indian freelancers or the companies outsourcing their services.

    Comment by Outsourcer — April 27, 2009 @ 4:17 pm

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