SW development: India Vs China

Bangalore is the IT hub of India. There were many factors which helped Bangalore to become the Si Valley of India.

(1) Availability of Skilled Man Power
(2) Lower Wages
(3) Lower Infrastructure Costs
(4) Corruption free administration
(5) Moderate Climate

In past couple of years I have seen many MNCs closing down their India Operations. In last one year China has emerged as a much better Software Outsourcing Destination. Most of the Engineers in India, refuse to accept the fact that China can take over India in Software outsourcing. But, it is the time that Indian IT work force wakes up before they start loosing their jobs. Let us compare India and China based on the above five factors.

Skilled Man Power : Number of skilled software man power in Banglaore is continuously growing. But the number of good quality skilled man power is continuously on decline. Most of the bright engineers prefer to migrate to USA and Europe. And those who stay back, switch their jobs so fast that companies hiring them can not count on them. Migration and Attrition are working against Indian work force. On the contrary, the quality and communication skills of chinese software engineers is continuously increasing.

Lower Wages : The average Software salaries in Bangalore have more than doubled in last three years. This is also in sync with the inflation rate in India. However, the infaltion and wages in China are under strict control, which makes it an Ideal destination for investors. Shanghai, the most expensive city of china, is still much much cheaper than Bangalore.

Infrastructure Costs: The infrastructure costs in Bangalore have become comparable with most of the cities in USA. However the quality of infrastructure is becoming comparable with third word countries. Office spaces in China are many times cheaper than in Bangalore. The SEZs in China also offer other investment benefits to the investors. At some IT parks, office space is available for free and tax benefits are a big attraction. Most of the Chinese cities have infrastructure comparable to the USA and Europe.

Corruption Free Administration: One of the reason why Bangalore emerged as a bigger IT hub, as compared to other Indian cities (Hyderabad, Pune, Chennai and Delhi) was the ease of entry and corruption free administration. Those who live in Bangalore are aware of how the scene has changed in last few years. I am not sure if local Chinese administration is really corruption free. But Chinese Government at least makes sure that foreigners do not get affected by the corruption in administration (if at all it exists).

Moderate Climate : Climate alone is never a factor for investors. However for the work-force it can be a decisive factor. Bangalore seems to be loosing advantage even on this front.

Let us come back to the common perception in India, that China can never overtake Indian Software Industry. Those of you who believe in this theory might find THIS REPORT shocking and shaking. Indian software engineers had following three distinct advantages over China:
(a) Better English Speaking skills
(b) Better quality software
(c) Better Anti-piracy laws in country
Over last couple of years, this gap between India and China has bridged, and there may be a time, when China might be on a stronger side than India.

This is the right time that Indian IT force wakes up.

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For those who want a comparison between India and China, there is another interesting news. Chinese Forex reserves hasve crossed 1 trillion USD mark. Current Indian Forex reserve is about 6% of Chinese Forex reserver.