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China - Advantages & Disadvantages
In the outsourcing field, China is the biggest challenge
in the future and the largest threat to India. With the
largest population and fastest economic growth, China
has at least two strengths in the global outsourcing market:
manufacturing and IT.
The main advantages of China are as follows: |
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Lower Manpower costs: The Chinese workers cost about 15 percent less than equally qualified Indians. |
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Japan Advantage: China is likely to grow through the Japanese outsourcing route. The advantages that China has are Japan's proximity to China, similarity of the languages. India currently offers almost no BPO services in Japan. |
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Extremely low cost real estate and power: These costs are lower than in India. This can be a very attractive to the US companies, which are looking for cost cutting due to the downturn. |
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Proactive Govt.: The govt. is very friendly to this sector and has taken the following steps. |
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- English teaching and other skill sets: Over $5.4 billion was invested in nine universities in China to promote English language and other skill sets.
- Increasing telecom density and PC penetration: China scores over India in these aspects and intends to further increase the gap.
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Leveraging on the manufacturing image: Western manufacturing companies have found that outsourcing their manufacturing function to China for their companies' global operation can be profitable and also of good quality. |
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| The main disadvantages of China are as follows: |
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Lack of a good Quality record in Software: India has a better image as a quality supplier mostly due to its track record of better quality software than China. |
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Low English speaking population: This is the biggest drawback of China. It has a very small proportion of the population speaking fluent English. |
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Less mature: The Indian business processes are much more mature. China has only recently entered into BPO. As such, despite lower billing rates, total project costs in China would turn out be higher because of the higher overheads incurred. |
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Philippines - Advantages & Disadvantages
In the Philippines the manpower costs are 60 to 80 percent
lower as compared to UK and US. The average salary cost
is around $700-800 per month in the BPO sector. The country
has a shortage of manpower mainly due to the small population
as compared to India. The manpower base for BPO is only
300,000. Right now the country is getting business from
nearly 70 companies employing more than 12,000 people
with revenues of US$ 250 million.
The main advantages of Philippines are as follows: |
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Large scale technical training program: The govt. has initiated a no. of policies by which the skills can be provided to a larger population. |
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Improved telecom and office infrastructure: Philippines scores over India in this respect. |
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3rd largest English-speaking nation in the world: This is a very important advantage. |
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Well developed IT skill set: It is considered 2nd only to India due to performance in software. |
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Costs of technology workers: This is(which represents the biggest recurring costs for, say, a B2B site) is only around 16% to 25% in the Philippines to that of comparable workers from the United States. |
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Former American colony: As a former American colony, American culture and language is widely emulated here. These cultural and communications skills could prove to be so appealing to American firms that they would outweigh slightly higher labor costs in the Philippines. |
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| The main disadvantages of Philippines are as follows: |
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Low graduate turnout: Philippines has a low graduate turnout (only 400,000 per annum). This compares very unfavorably with India. |
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Not having a record of high quality: India has consistently delivered very high quality in Software and has built a very high reputation in it. |
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Political instability: The country has frequent elections which makes it difficult for companies to outsource as there is lack of uniformity of policies with changes in the Govt. |
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No disaster recovery facilities or multi-location facilities: After the WTC bombing terrorism has become a very important issue for the US companies in particular and they want that the BPO providers should have multi location facilities which can be used in case of any terrorist attack. |
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Issue of scaling up: Philippines faces the important issues of scaling up. Issues like scaling up have stunted the growth of BPO activities being outsourced to Philippines. The largest call Centre in Philippines of AOL has only 800 people. The size of the Philippines BPO industry is only $100 million, whereas India's BPO industry is presently at $1.5 billion (2001-02). |
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