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Effects of Outsourcing Companies Positions to Low Cost Countries Part 5



Depleting IT Talent Pool in USA:

To understand why outsourcing companies are infiltrating countries we must realize that the USA has a fast depleting talent pool in technical fields like Computer Science and Physics. So the companies are forced to seek talent outside the country or to send the job to country where there is a large talent pool. India and China are the best examples for this. India has a large population of engineering graduates who have refined technical skills and are able to do the job for less. Also China produces largest number of Computer engineers every year. So to compete against them united States should try to encourage its students to enter technical fields and should also introduce courses in schools and universities to increase technical skills. The report "Inside the Debate over Outsourcing Information Technology Service Jobs Overseas," published by Manufacturing News, talks about the issue of talent shortage in America.

The reports also discusses about the rising number of job protection groups, some of whom have websites; although these groups are trying to bring into focus the job loss and economic hardships caused to the American workers by outsourcing, some of their sites have included racist and biased remarks. And instead of using reasons they are resorting to insulting the foreigners who are taking their job overseas.
Having discussed in length about the issues in outsourcing like security concerns, questions on job loss, depleting talent pool in America, and others, we now move our discussion to the outsourcing destinations and the IT infrastructure in those destinations. Within companies outsourcing destinations India and China have emerged as the leading destination IT job outsourcing. For out study we did an analysis of China as an outsourcing destination.

  • The report "Country Analysis: China" talks about China as an outsourcing destination. The highlights of the report have been summarized as follows: The software outsourcing market in China is a US$1.5 billion market with annual growth rate of about 35%. The present position of China is where India used to be 12 years ago. The growth in this sector is fuelled by the large supply of low-cost and qualified labour and a large internal market.

Although the Chinese market is promising it is suffering from some serious problems like the lack of English language proficiency among the programmers and managers, the Chinese companies do not have established quality control procedure like their Indian counterparts. Also the large problem of software piracy in China is not helping it to become a credible destination for software development. The Chinese government is launching programs to encourage and develop the software industry. But it does not have a good international image because of its un-democratic style of governance and many European companies and US companies are hesitant of doing business in China because of this. Although China has a large supply of IT professionals, those qualified in software engineering and software are very limited because the Chinese universities still emphasize the traditional engineering fields like mechanical engineering and electrical engineering. Also, China has made great improvements in the telecommunication infrastructure but the developments are concentrated in the big cities and near the costal regions. The heartland and the rural areas are still far behind. This limits the Chinese market for software sales and development. We can see that China is a promising destination for IT outsourcing, but then it has some problems too. The country is trying to take the position India has in the outsourcing market, which it may be able to if we look at the IT infrastructure and other surrounding issues affecting IT development in the South Asian market.


A report titled "Struggling with the Digital Divide, Internet Infrastructure, Policies and Regulations," published in South Asia net, talks about the problems facing the South Asian IT industry. The highlights of the report can be summarized as follows: The Internet made way to the South Asian region in the late 1980s through bulletin boards, government and non-government initiatives. In India, in the year 1995 government-owned VSNL started offering Internet access to the public. Private companies entered the market in 1998. In Nepal, the Internet was introduced in 1993 and in 1996 the people were given access to the World Wide Web. In the beginning only the big cities in the region had access to the Internet, but now Internet usage has spread to the rural areas too. For example: In India many villages' government agencies have set up their own websites and offer many of their services online. Although the Internet is spreading in South Asia, the lack of infrastructure, antiquated legislations, language barriers and the high cost of Internet access are hampering growth. We can see that the South Asian IT infrastructure is facing problems, but the industry is trying to overcome it and keep its position as a favoured outsourcing companies destination.


Effects of Outsourcing Companies Positions to Low Cost Countries Part 1...Read More
Effects of Outsourcing Companies Positions to Low Cost Countries Part 2...Read More
Effects of Outsourcing Companies Positions to Low Cost Countries Part 3...Read More
Effects of Outsourcing Companies Positions to Low Cost Countries Part 4...Read More
Effects of Outsourcing Companies Positions to Low Cost Countries Part 6...Read More
Effects of Outsourcing Companies Positions to Low Cost Countries Part 7...Read More
Effects of Outsourcing Companies Positions to Low Cost Countries Part 8...Read More


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