Conventional wisdom says that India is the place you go to if you want to get software application development. This has made the six major Indian software companies, Satyam, Wipro, Infosys, TCS, Cognizant and HCL, frequently referred to as SWITCH, the major players in India. Now, each of them earns over US$16 billion in export revenue annually.

Now though, IBM is investing heavily in India, and the IT talent force in India is showing signs of strain. Employee turnover is high, and with the Indian rupee rising 10% against the US dollar in 2007, profits are getting squeezed. The result: smaller clients are now complaining of poor service, while the major clients, spending more than US$100 million in outsourcing costs annually, are getting the attention.

For this reason, more clients in the US and elsewhere are taking a closer look at Chinese outsourcing companies like Symbio, Augmentum and Neusoft for getting their software projects done. Compared to the Indian companies, they are much smaller, but they have much more room to grow. Moreover, all of them are planning to go to public markets to raise capital to fund their expansion.

When it comes to finding IT talent in China, all are expanding into the tier two cities of Chengdu, Hangzhou, Guangzhou, Jinan, Nanjing, Shenyang, Shenzhen, Tianjin, Wuhan and Xian. Compared to India, outside of the main IT center of Bangalore, Chinese tier two cities offer far better road, electricity, water and broadband access, and modern office buildings for investors and employers. Compare this to India, where all the development parks have had to be built by Oracle, Microsoft, IBM and other foreign employers, not by the Indian government.