With the current economic downturn, reduce cost and maintain customer satisfaction is on everyone's mind. The cost reduction of IT operations and back office operations are among the first things on every CIO's mind. Could China, formally known as the world's factory with its low labor cost, be an answer to the reduction of IT spending in today's world economy? Here are some basic facts that could help to understand What China has to offer to the enterprises on cutting IT cost.
World's largest talent pool: IT service industry including (ITO, BPO, Share Service Centers, etc), is a industry of highly educated people. China, in 2007, has 4.95million of university students graduated in just that one year. 4.95million is a number that is larger than the population of Ireland. When compare to India, this number is more than 3 times the number of India's annual university graduates.
World Class Infrastructure, infrastructure is a Key for offshoring operations. Chinese government has invested heavily in general infrastructures like street, city layout, airports, power system and network system, which results in the modernization of the most of major Chinese cities. When compared to the outsourcing giant, India, people who had been to both places would easily tell that China's infrastructure is many years ahead of India.
Low Low Cost, COST. Bearingpoint had conducted a study, and shown that 60% of the driving factor for outsourcing and offshoring is COST. So, cost is always important, and especially during the current global economic crisis. To give an indicator for the general labor cost, in the most expensive city of China, Shanghai, the average annual salary in 2007 is RMB29569 ($4285, with 6.9 exchange rate), and that is close to an average American makes in 2 months. In addition, the daily operation cost including, rent, facility, equipment, etc, are much lower too.
In addition, a second tier cities like Wuhan (with 8.9 million population), the average annual salary in 2007 is only RMB19760 ($2864).
Besides these three main advantages, there are also many other interesting aspects that we could explore like Language capability of supporting Jap, Korea, and entire APAC area, lower turn over rate, and more.
With these advantages, it is believe that China, "the world's factory", would soon become "the world's back-office".
World's largest talent pool: IT service industry including (ITO, BPO, Share Service Centers, etc), is a industry of highly educated people. China, in 2007, has 4.95million of university students graduated in just that one year. 4.95million is a number that is larger than the population of Ireland. When compare to India, this number is more than 3 times the number of India's annual university graduates.
World Class Infrastructure, infrastructure is a Key for offshoring operations. Chinese government has invested heavily in general infrastructures like street, city layout, airports, power system and network system, which results in the modernization of the most of major Chinese cities. When compared to the outsourcing giant, India, people who had been to both places would easily tell that China's infrastructure is many years ahead of India.
Low Low Cost, COST. Bearingpoint had conducted a study, and shown that 60% of the driving factor for outsourcing and offshoring is COST. So, cost is always important, and especially during the current global economic crisis. To give an indicator for the general labor cost, in the most expensive city of China, Shanghai, the average annual salary in 2007 is RMB29569 ($4285, with 6.9 exchange rate), and that is close to an average American makes in 2 months. In addition, the daily operation cost including, rent, facility, equipment, etc, are much lower too.
In addition, a second tier cities like Wuhan (with 8.9 million population), the average annual salary in 2007 is only RMB19760 ($2864).
Besides these three main advantages, there are also many other interesting aspects that we could explore like Language capability of supporting Jap, Korea, and entire APAC area, lower turn over rate, and more.
With these advantages, it is believe that China, "the world's factory", would soon become "the world's back-office".
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