China: A BPO Giant Waiting to Happen?

Phil Fersht is rapidly settling into his new role as an analyst at AMR Research, publishing copious amounts of content and analyses. A recent research brief he penned analyzes whether or not China is destined to become an outsourcing/BPO powerhouse (registration and research subscription required) like its neighbor to the West, not to mention "the Philippines, Central and Eastern Europe, and Latin America." Without giving away Phil's analysis for non AMR-subscribers, let me offer up a few points of my own based on first-hand experience.

To start, I've found many professional Chinese workers to be chronically looking for the next big thing, jumping from job to job just as Eliot Spitzer jumped from hotel room to hotel room with la femme du jour. Part of this stems from the fact that most Chinese companies that I know do not know how to engender employee loyalty like those in the West. One I spoke with last year does little -- but hugely effective -- things like sending out moon cakes and notes to family members of employees thanking them for their son/daughter's contribution. But few Chinese companies get involved in active career development, offering programs to keep their professionals around for any sustained period of time. In a BPO/outsourcing climate, maintaining skilled workers is critical. It's not that hard to imagine that if China were to go through an outsourcing and skilled wage inflation boom like India how annual attrition rates might accelerate to 50% or more.

Add on top of this that China is a country where acceptable English language skills are hard to find (despite the focus on English education). And add to this the English that many professionals attempt to speak is nearly impossible to understand unless you're sitting across the table from them (trust me, I've struggled with this for years). Relative to other outsourcing hubs that have strong English or localized language skills, China has a got a huge way to go. That is, unless the mainland will serve as an outsourcing hub for Chinese colonies in Africa where Mandarin takes over the local language, but don't get me started on that tangent.

In other words, if I were a betting man, I'd suggest that China shows little promise of becoming a BPO giant. Perhaps we'll see some limited offshoring in areas like software development, but India has a much better shot at duplicating China’s manufacturing export success than China has at copying India’s BPO/outsourcing boom.

- Jason Busch

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