Outsourcing: Is China the world's new back-office?

There's growing evidence of China's outsourcing muscle…

... a Chinese or Asia Pacific hub. It is no coincidence that the largest outsourcing cluster in China is Dalian, conveniently located in the northeast of the country for Japanese and Korean businesses.

But in Capgemini's new centre, there was also something new on display: Chinese resources processing for US and European operations. There was no fanfare for this development. Like other outsourcers, Capgemini's focus is on giving clients access to a global network of centres, in which the location of delivery becomes almost irrelevant.

Nevertheless, it is happening. BPO and IT outsourcing are being carried out in China for global operations, and that means China is finally becoming an option in the global services marketplace.

Price comparison with India
Just how important a role it will play will depend on several factors, not least price. If outsourcers can offer their China services at or near the price of offshoring to the subcontinent, China will emerge as the de facto global outsourcing alternative to India.

Bicycles in Guangzhou, southern China

Despite the education of workers in cities such as Guangzhou in South China, questions remain about foreign language skills
(Image credit: Paul Morrison/Alsbridge)

But if outsourcing to China is more expensive than the competition, it will need to find a niche specialism to attract global business - such as a focus on specific technologies or business processes. If this is the case, it is not yet clear in IT or BPO terms what these specialisms would be.

Equally, the depth of China's language skills is unproven. Official figures may claim 300 million English speakers in China but the reality is that the number of fluent speakers makes up a small fraction of that figure. The impressive line-up of English speakers fielded by new delivery centres, such as Nanhai, could represent the cr