Who Will Win the War? India’s Outsourcing or China’s Manufacturing?

Hey guys, Just got time to go through Matt’s interview session on the WordCamp Europe 2016 and after it while crawling for some of his other interviews got a fantastic spot: “WordPress’ footprints on the global map!” Except for the communist superpowers – Russia and China – all around the world over 409 million people view more than 24.6 billion pages in over 120 languages. “Next year, I hope to see a little dot on the Russian map too!” Mullenweg stated confidently, a moment later, with a smile on the lips. It made me curious to understand how can countries like Russia and China avoid such a dominant fuel which powers 28.7% of all websites globally. When I realized there are 50,000 WordPress sites added daily, I became impatient.

Of course, what could be a better option than the internet? Slowly nights started to occupy in quenching my thirst of knowing the reason. However, it led me in a new direction. Out of nowhere, it struck me, how about if I keep aside Russia and put these two siblings: “India & China.” Both have a thriving potential to rock the world of 21st century. More above it, both have done a tremendous growth in the IT field in the last few decades, but surprisingly both seem to have chosen an opposite path to achieve the same goal.

Let me share with you a different story which depicts this rivalry more accurately. I love the game of cricket. Cricket is the game where both the teams are given fair time and chance to win. It depends on the strategy chosen and followed by the teams. Sometimes they win by bowling, sometimes by batting. The case of strategy building with outsourcing and manufacturing is the same. India’s strategy seems to be converting the success of outsourcing to future manufacturing projects, and China falls on the complete opposite path, taking advantage of its homemade products to put the feets in the outsourcing. Both have strengths, both have weaknesses, and surprisingly, both know about each other’s strengths and weaknesses.

India owns tough position as of now on the offshore outsourcing whereas China owns a powerhouse label in Manufacturing market. The question just remains as my blog’s title … Who will win the war? India’s Offshore Outsourcing or China’s localized Manufacturing?As the image above shows, both the countries seem to be thirsty to achieve the same goal, but both have chosen completely different ways to accomplish that. I have a justification for this statement and its as follows…

India’s Offshore IT Outsourcing:

The IT industry in India is just an angel story of last two decades. Let me take you back a bit. Fortunately, some Indian folks sniffed the potential of the computer world on its rising edge which resulted in first computer import in India at 1956 with the princely sum of Rs 10 Lakh. After that, it kept the track with the introduction of the personal computers which changed the world of computers for sure and more precisely resulting in bringing computers from the offices to one’s bedroom. With the introduction of the internet, India was now fully ready to bloom over the IT market with its complete “Homework” of computer systems. The history of Information Technology outsourcing started around this time and still, today continued with 1.2% share of India’s GDP as in 1998 to 7.5% in 2012 proving itself an “Earning Son.”

According to some estimates, India controls 44% of the global outsourcing market of software and back-office services. And thus, India has become the host of the choice of most American and European Union companies for outsourcing. Surprisingly, the risk of privacy of data has raised with such out sourcing practices such as danger of handing over the customer specific private information of credit card numbers, driving licence numbers, social security numbers, etc. but still they trust more on Indian companies than on the other ones which raise the brand value of India in the market.

This has been the story of last two decades, now with the new government, Indian route of growth has been tried to come out of the comfort zone and drive to the manufacturing market.

PM Modi’s Mission of “Make In India“:

Since when the new government has come into the power, India has seen some of the significant economic changes in the very short time. Make In India is one of the very eye catching campaigns in this direction. Make In India more precisely and more closely related to IT Industry as its the only sector as of now which is having tremendous scope to Make Something In India. The reasons are more clear but the main reason proving it is that it’s the most modern business of the 21st century and India has the complete “Homework” to its report card.

Thus, PM Modi’s announcement seems to be the reverse journey from outsourcing to manufacturing in a particular pre decided manner.

China’s Manufacturing Powerhouse:

Unlike India, China’s journey towards the computer technology started around the same time but on a parallel track. India’s computer drive was much based on the U.S and the European Union but China started from Soviet Russia. Parallel in a way that unlike a long halt in doing something with the computers in India, China dived into hardware manufacturing which was producing a significant amount of computer parts in the sixties and seventies. When China came to be introduced to the Internet world, it had already set up a kingdom in the hardware manufacturing. May be this way, it gave a slow start for the Chinese folks to understand the potential advances of the internet and IT related services. Nowadays China has broken this norm and has tried in last two decades to take the full advances of the IT Services but still has decided to create its own track rather than being on track, as World’s largest search engine Google is banned (With its version of the search engine, Baidu!!), World’s most major social networking sites including Facebook is banned and so on for the other open source technologies too.

Surprisingly, the Chinese government has decided to create its open source environment and attract the world to use its technology. Thus, China also seems to be following India’s track of reverse journey but with a label “Made In China.”

Interesting Comparison:

According to Chinese officials, the software sector share was the US $493 Billion (Majority of which was the localized software manufacturing) in the year of 2014 where as on the other hand India’s software market was declared of US $100 Billion (Of which 61.9% was export.)

China’s software outsourcing was expected to reach about the US $60 Billion in 2015 where as India’s report card was showing turnover of US $62 Billion for even 2012.

According to a survey, Indian IT sector employees earn quite more than their Chinese brothers.

That was an amazing experience writing this article. You can openly share your comments and thoughts below…

References: Is China going to beat India when it comes to IT talent in the near future?