Just read a post on the Computer Weekly Blog entitled, “Would you offshore your IT to China?” (h/t to the China Outsourcing Blog).  The post talks quite a bit about  US listed Chinese outsourcing company, VanceInfo and its recent merger of equals with HiSoft to form Pactera Technology International.  My firm has represented VanceInfo for many years so I am going to remain silent on the merger, but that representation has given me a somewhat inside look at how China is perceived as a destination for IT outsourcing.

The Computer Weekly article also polls its readers as to whether they would outsource their IT to China and at this point the yes votes are tied 1-1 with the no votes.  What I find fascinating is how many companies are so much slower to outsource to China than they are to India and their explanation for that is often something along the lines of how China is the wild wild west or that it has no IP laws. The funny thing about this is that each year the US Trade Department does a priority watch list of the worst countries on IP protection and each year both India and China (and Russia too) are on that list, usually made up of about ten countries.  And when it comes to handling commercial disputes, China consistently does quite well in the World Bank ratings (top 20), whereas India is always very near the bottom. Now I am not saying that these statistics mean that China is safer than India for outsourcing (especially since I am of the view that in the end the best analysis is by company, not by country), but I am saying that the fears regarding China are exagerated, at least as compared to India.

Of course, for all I know, the poll results for India would have been similar, but I do not think so.

What do you think?  Would you outsource your IT to China?  Are you already outsourcing IT to China? Are you any more or less willing to outsource your IT to China than to India?

Just came across an interesting debate in Information Week’s Optimize Magazine on whether China is ready to become a major force in IT outsourcing.  The magazine asks the question and received “opposing” answers from the two professors questioned.

Peter Williamson, a professor of Asian business and international management at INSEAD in Singapore answers,”no,” because a fragmented industry and a dearth of English speakers are holding China back for now.”  Go here for that article.

Oded Shenkar, the Ford Motor Company chair in global business management at the Fisher College of Business, Ohio State University, answers, “yes, because government prodding and market pressures are propelling China onto the IT outsourcing stage.”  Go here for that article.

A close reading of the two articles however, reveals more agreement than disagreement.  Shenkar, who answers, “yes,” concludes his article with the following:

Finally, China has more science and engineering students in the United States than any other country, and increasing repatriation rates translate into a flow of a highly capable and globally experienced workforce back to the mainland. The bottom line: You can ignore China at your peril. In five to 10 years, the factory to the world may well become its outsourcing mecca.

Williamson, who cast the negative vote, concludes his article with the following:

For these reasons, China isn’t ready to be a major outsourcing player today. Nevertheless, it would be wrong to write that nation off as a viable competitor in IT-enabled services long term. China is rapidly strengthening its base of software development, and clusters of excellence are emerging: Dalian, in northeastern China, for example, is home to 18 of the world’s top IT companies, including Accenture, General Electric, and IBM. This, in turn, is attracting outsourcing and service activities.

China has another big advantage fueling this growth over India: a large home market for IT. And there are many other potential customers in neighboring, higher-cost Japan and Korea. Given the capacity for rapid learning in Chinese companies and the pool of more than 3 million university graduates entering the market each year, many trained in IT, China is unlikely to confine itself to competing for regional business.

As in the manufacturing sector, after a base is established, China tends to be aggressive in looking for new global markets. While it’s years behind India in these services today, China may be a serious alternative for evaluation in the future.

Seems Williamson and Shenker agree more than they disagree and both agree China is likely to eventually become an IT outsourcing powerhouse.

For more on China IT outsourcing, check out the following:

1.  My post of about a month ago, entitled, “China Outsourcing — Consolidation Waiting (And Waiting) To Happen

2.  “The 2006 China Outsourcing Fair” on China’s big outsourcing fair, taking place from September 7 through the 16 in Beijing, Xiamen, Wuhan, and Tianjin.

3.  “China IT Outsourcing,” [link no longer exists] which concludes China is five to ten years behind Indian IT and “foreign companies in China are spending a small fortune subsidizing China’s education system.”

Just came across a week-old blog that shows much potential.  Called “Go East – Outsourcing to China,” it appears the thrust of this blog will be China outsourcing, mostly of the IT kind.  One of the great things I have found about reading other people’s China blogs is the knowledge of Internet resources the bloggers have within their own field.  Go East links to a number of excellent articles on China technology outsourcing.

The other day I was thinking that one of the most surprising things I have learned since starting this blog is how insightful the industry press can be on China.  Some of my favorite articles on which to blog have come from industry sites like CSO Online and Automotive News, which look at China from a micro perspective, and thus are less likely to be tainted by politics.  I will no doubt be pulling IT outsourcing articles from Go East.