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The volatility and uncertainty in the offshore development center can be easily noticed in the Chinese markets since the COVID-19 stepped in dramatically. The offshore Chinese market seems to be completely ripped off since there is an evidential shift from offshore development services in China to Indian companies.
Chinese officials have a new have to do – sustaining the offshore market. The new reality is perhaps bitter enough for China to confront where everyone from everywhere is shifting their focus from Chinese industries to the Indian market.
China is perpetually claiming to be free from the impact of COVID-19. That sounds unconvincing, especially after a man in China recently found to have H10N3 bird flu, a reminder of continued concern for pandemic flu – as stated by The New York Times.
Chinese industries claim to have sorted it with deadly coronavirus after the complete lockdown was followed. Almost every sector is back in motion in China; however, it seems helpless to assist them in getting business from the rest of the world.
In fact, the entire industry trend has been completely transformed in China after the COVID-19 has hit. Companies nationwide prefer to look for other countries (especially India) after the story of Chinese industries about being free from COVID-19 impact sounds unconvincing and unrealistic.
Positive Shift of Offshore Development Center from China to India?
This is an opportunity for the Indian markets to become offshore development center giants precisely. Companies are constantly looking for alternatives to China like India, Vietnam, Mexico, and Indonesia. Usually, companies target Vietnam, other than India for offshore development for an apparent reason – low labor costs.
However, the COVID-19 pandemic has got one country into the limelight for the offshore development center and many other services. Companies are finding it the most lucrative alternative to expanding their business rather than China.
“Washington’s technology cold war with Beijing has resulted in strategic decoupling, prompting manufacturing supply chains to shift to new locations. India finds itself well-positioned to absorb these supply chains,” says the report.
The trends say that the friction between Beijing and Washington will only help India if the former chooses to address the long-standing roadblocks, which even included the inefficiency of the government and uncontrolled regulations.
Even tech giants Apple has denied their production in China and shifted it to India and Southeast Asia. This move majorly blew up the feud between Washington and Beijing.
‘India evidently is getting an advantage of this tension between the two and gaining a competitive edge in different industries.’
BBC said, “With Covid-19 infecting millions across the world, China is facing an unprecedented global backlash that could destabilize its reign as the world’s factory of choice.”
The US-India Business Council (USIBC) told BBC “We are seeing India prioritise efforts to attract supply chains, both at central and state government level,” Nisha Biswal, President of USIBC and the former assistant secretary of state for south and central Asian affairs in the US Department of State.
Reasons ‘Why India Could Be the Next Offshore Software Development Hub’ Beating China
Companies are shifting from China to India – they have a bunch of reasons why investors prefer India over China. Also, these reasons for turning to India from China for offshore development center has become more potent since the pandemic has hit.
India has become a premiere IT outsourcing Destination of the world. Here are the most apparent reasons companies are shifting to India to fulfil their offshore software development needs.
- Low Labor Cost
One of the most prominent reasons behind companies shifting to set up offshore development centres in India is the availability of low labour cost here. The average monthly wage of a Chinese worker is somewhere between $140 and $340. However, in India, the same Software Development services can be availed at as low as $70 – $200, without less or minimum bargain. Hence, India anyway is more affordable than China comparatively.
- India is a Gigantic Market
India, managing to have the second largest population globally, poses a huge potential for companies to set up as the dedicated offshore development center. However, it is way easier for the firms to hire the best prospect in the Indian market amongst such a vast population.
- The Democracy
India is a democratic country. That’s the most significant advantage for western companies, as they can quickly adapt themselves to Indian markets, government agencies, Indian Developers, and Indian culture. In addition, the offshore software development center in India enjoys fair competition in the markets, which is not visible in the Chinese market precisely. Since companies had enough time to notice that they feel more secure during the COVID-19 phase, they feel more confident in the Indian market than the Chinese.
- The Growth Has Been Intense in the Past Few Years
If we consider the population of India, it is approximately the same as China. However, the Indian market has shown tremendous growth in the offshore software development market in the past few years. The major success was dependent on the service-based industry, which even includes offshore software development.
What Limits India from Becoming the Next ‘Offshore Software Development Hub’
The success of India as the leading offshore software development company is already in motion. However, a few limitations are still halting the success of India as the leading offshore software development hub, which are:
- Not-So-Good Infrastructure
The infrastructure in India is not as rich as in China, where firms were established decades ago. However, India is making a positive contribution to rich infrastructure for the past few years.
- Volatile Currency
Indian currency, Rupee, is a volatile currency due to its free-floating nature. On the other hand, countries like Vietnam is known to have a more stable currency. Simply put, that means the currency of Vietnam doesn’t change so frequently. Hence, a non-volatile currency is preferred by foreign companies, which can be a drawback for Indian companies. Read our post how to transform bad outsourcing experience into good.
- Evident Political Concerns
Developing such an exclusive economic zone in India requires a lot of lands. The acquisition of such huge land can be a pretty evident concern and turn into a political crisis. That can be an issue for foreign companies amidst changing policies to boost the economy.
India over China: The Preferences are Changing
It is not just the offshore software development market that is changing. Many other industries in China are facing the impact of the pandemic. India, however, is getting noticed and experiencing the leverage of being the major offshore software development center.
Setting up offshore development center in India seem more exciting and meaningful to foreign companies now. India could be the next global offshore development center hub, and that already seems to get into the picture.
As an offshore software development center, China might be ratcheting up, but India has already begun to grab the market. That’s a pretty good reason why India has to prioritize China for gaining an edge over competitors in software development.
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