Watch out India! China wants to be outsourcing powerhouse
Already known as the world’s factory floor, China now wants to turn into an international outsourcing powerhouse, a report said Friday, a move which could challenge India’s prominence in the industry.
Outsourcing will become a new area of foreign investment for the country and China will encourage multinationals to outsource from here, the official Xinhua news agency quoted Vice Premier Wu Yi saying at a forum in the southeastern city of Xiamen.
China, already a favorite with multinationals for manufacturing and research and development would make a snug fit for outsourcing services, Wu said.
With four million graduates entering the workforce every year China offers a huge pool of talent for high-end industry outsourcing, she said.
China wants to restructure its low-end manufacturing economy by investing in services, outsourcing, high-end manufacturing and Research and Development services, Wu said.
India, the global leader in outsourcing services such as software and call centers, employs about 350,000 people in an industry that earned US$6.7 billion in the year ended March 2005.
However, rising costs could threaten India’s headline position as major IT groups such as Apple Computer and software maker Pervasive, have joined Anglo-German Powergen in closing operations in technology hub Bangalore.
Separately, the Indian science minister said in Beijing on Friday that India and China plan to set up a Cabinet level body to pursue joint technology development amid rapid growth in trade between the former Asian adversaries.
New Delhi also is looking to China as a market for farm exports and a source of investment for infrastructure projects, said Indian Science and Technology Minister Kapil Sibal.
“From the Indian standpoint, China will be our biggest partner in years to come,” said Sibal, who was on a five-day visit to the Chinese capital.
Sibal said he signed a memorandum of understanding Thursday with his Chinese counterpart, Wu Guanhua, to set up a committee to promote joint research. He said a formal agreement is expected to be signed when Chinese President Hu Jintao visits New Delhi in November.
Under the agreement, the two sides will create a “road map” for joint research on high-tech projects and on solutions to common problems facing their vast, poor populations, Sibal said.
“If you were to marry China’s hardware with Indian software, we could make goods for the international market that are high in quality and low in cost,” he said at a news conference. “This is an ideal relationship that we can nurture for the future.”
Sibal’s visit coincided with a trade show in Beijing by 48 Indian companies, ranging from biotechnology and electronics firms to makers of textiles and machine parts.
The minister said the two governments also hope to collaborate on solving environmental and other problems where he said India and China have unique experience.