Concerns around data security and protection of intellectual property are also significant deterrents for companies to operate in China, according to Everest. Services that require access to customer data, sensitive technology platforms, sensitive IT systems, or proprietary tools and knowledge are almost never sent offshore to China, it added.
China has also not been able to put together a countrywide focus on outsourcing, Pai said. The promotion of the business has been left to the provincial governments that compete with one another for business, and do not present a unified front to the market.
The country's low-cost staff however continues to provide an incentive for companies to try out new models for clients in North America, such as a two-tier model where some services are delivered out of China while others are delivered from another location, according to Everest.
Services that are more standardized, require limited interaction with the business in English, and benefit from scale can still be done from China for global markets, Ramesh said. Examples of such services are testing services as part of application development, and digitizing engineering designs, he added.
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