The main advantage of outsourcing is the cost reductions achievable, which can run as high as 40%. The aim is to avoid spending more money than it would cost to do the same work in-house. According to Gardner Inc. in Stamford, Conn., by 2004, eight out of 10 CIOs will have direct marching orders to move offshore at least part of the technology services they provide to their businesses, thinking that skills really needed in-house are business analysis skills.

On the one hand, outsourcing allows the user to concentrate on its core business. Focusing attention and investment on core business will no doubt increase productivity and efficiency. Outsourcing helps companies realize longer-term strategic goals to increase IT staffing flexibility and gain access to an expanding base of world-class IT skills, so they can quickly respond to business opportunities.

On the other hand, the business process that is handed over to the expert will be performed better, cheaper, and faster. The main objective of outsourcing is to accelerate your business growth.

China is experiencing a tremendous economical growth. China is fast emerging as a serious competitor to India and is challenging India’s lead in the software development marketplace. Regarding the current market evolutions, China happens to be the next big wave in offshore outsourcing, and is no doubt the next back office of the world.

- Effective Cost Reduction
What companies are mainly looking for when they outsource a part of their business is cost reduction. India’s today's offshore cost savings won't last indefinitely: in mature offshore centers, increasing demand will inevitably drive up labor costs, explains Garner. For that matter, China appears to be the right country to sustain an effective cost advantage.

- Great potential of competent workforce
Soon companies will be faced with the problem of limited outsourcing resources in more established markets for IT services. India is likely not to be able to meet the market demand in the next few years. On the contrary, China currently has 400,000 IT professionals involved in the software export industry, with an additional 50,000 entering the workforce each year, according to Gardner. China’s universities could soon bring more than 200,000 science graduates on the market annually, Marty McCaffrey, executive director of Software Outsourcing Research in Salinas, says. In the past half-decade, the country's strong university system has ratcheted up programs in both computer science and English, says Atul Vashistha, CEO of NeoIT Inc., an offshore outsourcing advisory firm in San Ramon, Calif.

- Increasing Investment in IT
Government has taken a lot of initiatives in the recent past to give a boost to the IT sector in China. Gartner Inc. predicts that by 2007 China will pull in $27 billion for IT services, including call centers and back-office work, matching India.

- A Strategic Location
China has a strategic geographic location, and thus can be seen as a way to enter new businesses in Asia. Japanese and Korean multinationals are more easily reached by Chinese people, when languages and cultural specifications are taken into account.