Following up on Tarun's recent series of posts contrasting India and China... I believe that the need to establish comparisons between both countries araises from the obvious similarities of population size, GDP growth rate and foreign commerce advocacy. These are a set of very compelling and attractive features to resist the temptation of putting both countries in the same category, and benchmark one against the other in the context of global sourcing. I think these comparisons, however, are soon to become futile.
To make my point let me reference a recent speech by Dr. Steven Chu, President Obama's chief scientist and Secretary of Energy, where he pointed out to the possibility of the US losing its leadership in technology innovation. To support his argument Dr. Chu presented data showing the decline of US technology exports to other countries. In the 1990's the US controlled over 20% of the world's high-tech exports, and by 2008 the country declined to roughly 13%. In contrast, China grew from ~6% to ~20% in the same period.
One of the things that China has done really well is learning from the experience of others. They learned about the maquiladora industry in Mexico, as well as from high-tech manufacturing from South Korea. So, if we use the Korean experience as a reference, by which they evolved from manufacturing to building strong electronics brands like LG and Samsung... and add it to the evidence presented by China so far with the likes of Huawei, Lenovo and BYD --the world's leader in battery technologies--we can start building a case.
According to Forrester's US and Global IT Market Outlook report, China's domestic IT industry is the third largest in the world, trailing behind only the U.S. and Japan. China´s growth rate of 10%, measured in local currency, positions it as the fastest growing IT market in the world. India's domestic IT market is one quarter the size of China's, and ranks as the 13th largest in the world.
A strong domestic IT market in a non-English-speaking country, is a powerful combination of factors that reduces the incentives for companies to look for opportunities exporting services. Case in point: Brazil.
No IT services giant has emerged yet from China, a territory that India dominates with the likes of Infosys, Wipro or TCS. As Stephany Overby accurately points out, India's IT services industry is heavily supported in export services, and are climbing the ladder from ITO and BPO to KPO and higher value consulting.
Dr. Chu's call for action was not along the lines of bringing existing technology manufacturing back to the U.S., but to take the high road, and lead the world in the creation of clean energy technologies. Providing a glimpse into a path for evolution.
India and China still fall into the "developing economies" category, meaning that not all the pieces are in place yet. While they remain as such, I think comparisons in the global sourcing space will be inevitable, but also that both countries will follow different paths of evolution, just like the U.S. can lead the world in producing inexpensive, carbon-free, energy-producing technology, India and China will choose different routes.
So my bet is that soon these benchmarks will be as valid as comparing China's cricket capabilities to India's ping-pong.
Alex Camino
