So you finally decided to outsource, and you immediately encounter your next headache: India vs China, which country should I outsource my valuable product to? This guide below is the only material you need to solve this question.
But first, let's double-check your business is ready to outsource or not:
Pros & Cons of Outsourcing to India
It’s no secret that most companies prefer offshore outsourcing to save costs.
India has a low cost of living compared to other developed countries like the United States. This translates to lower salaries for your outsourced staff. You’d only have to pay a fraction of what you’d have to pay for a UK employee!
While that’s a given for any developing country, it isn’t the only reason why companies prefer offshoring to India.
2. Access to Raw Materials:
Indian foundries are strict about testing, retesting, and certifying, where they get raw materials. Working with manufacturers in India will also provide cost savings in raw materials because many metals are native to the region.
3. English Proficiency
Issues with outsourcing work mostly arise when there is a lack of understanding due to a language barrier.
However, many Indians speak fluent or native-level English since the medium of instruction for most higher education institutions is English. According to a recent study, India ranked 5th among the Asian countries proficient in English.
This way, you’ll have no trouble communicating work requirements with Indian workforces. As they’ll have no trouble talking to your customers and addressing their needs, they’re perfect for your customer support services.
4. High-Quality Machines:
Most people are surprised to learn that many Indian factories house Japanese machines. They also heavily rely on world-class measurement tools that are also manufactured in Japan..
Manufacturers in this region take great pride in their processes and outputs. One of the most important displays of transparency is how owners are open and welcome to invite you to their facility.
1. Time Zone Differences
Most Indians are proficient in English; however, you might still face some communication difficulties.
While virtual communication tools can help you cross the distance, time zone differences can create a delay in getting the message across.
2. Weak Infrastructure:
India does not have an efficient system for transporting manufactured goods. They spend a meagre 9% of GDP on infrastructure projects. A majority of their roads are in poor condition and their traffic system is chaotic. Additionally, even though it has a whopping 3,400 miles of coast, India only has three main ports. These factors make India a logistical nightmare for outsourcing.
3. Poor Power Supply: In 2018, India was ranked 80th out of 137 economies in overall electrical supply reliability by The Global Competitiveness Report. Demand is predicted to triple by 2024 and the country still heavily relies on coal. Limited electricity makes it difficult for foundries to meet production requirements.
Pros & Cons of Outsourcing to China
1. Cheap Manual Labour:
Labour is usually one of the highest costs and also the most important resource in manufacturing. Companies can reduce costs between 30% and 80% by outsourcing manufacturing to China. Their minimum wage runs from 115 Pounds to 255 Pounds per month compared to 47 Pounds to 144 Pounds per month in India.
2. Efficient Legal Processes:
From start to finish, the process of bringing legal action against a manufacturer takes around nine months. Additionally, The World Bank also rated the quality of Shanghai’s judicial process a 16.5 out of 18.
3. Strong Infrastructure:
China invests 20% of its GDP in infrastructure. They are focused on investing in their economy, a large part of which is manufacturing. The World Bank ranked China 26th out of 160 countries in its Logistical Performance Index, placing it above both Vietnam and India.
4. International Expansion Opportunities:
Moving production to China can bring logistical advantages by strategically positioning your product within reach of other Asian and European markets.
Companies have been outsourcing manufacturing in China for years, so foundries here can produce products that meet nearly any specification requirements.