Will 'security' kill China's outsourcing dream?

China has been inching forward in the offshore outsourcing race, gradually establishing itself as a potential threat to India's IT services industry. At the time when expectations about China overthrowing India in a few years were high, rising security concerns have put a question mark on such a possibility.

U.S. National Security Adviser Tom Donilon has openly called for china to discuss the issue of cyber attacks from Chinese hackers against US businesses and agencies.

Industry experts warn that the increasing concerns over security in dealing with Chinese companies could thwart the country's outsourcing prospects. While some also underline the need for better security strategy and best practices irrespective of the country that an organization is dealing with. James Slaby, director, security practice, HfS Research, told FierceCIO that companies using outsourcers in China are are "only embracing nominally more risks" if they use best practices, he said.

Although the growing issue of security concerns is very likely to dampen China's outsourcing growth, another view point is that as the risk factor is already taken into account at the time of outsourcing decisions, there should not be a major impact. But if the United States comes up with new legislation or policies against the country, then it could make things difficult.

Right now, China comes third in offshoring after India and Philippines and is often considered as a location with a different value proposition, that suits specific objectives. The demand is likely to come mainly from enterprises with objectives like being able to serve regional markets and those that are looking at entering the Chinese domestic market.

 

The article was first published in Globalservicesmedia.com