An interesting article in Forbes:

Indian cities like Bangalore and Mumbai could be eclipsed as outsourcing centers by Chinese competition by 2011, according to a new study.

…

“Chinese cities are on the rise and nipping at India’s heels,” IDC said. “IDC forecasts that Chinese cities will overtake Indian cities by 2011 due to massive investments made which are favorable towards offshoring.”

…

India increasingly appears to be a victim of its success. Rates of attrition and wages are rising as companies fight for talent. In the fiscal year through March, wages grew at an average of 12% to 15%, and wages are expected to rise another 20% in the present fiscal year. The Gartner report said India was witnessing a shortage of skilled resources at “all levels” of the tech personnel chain.

China is also on stronger ground when it comes to infrastructure and the relative ease in setting up operations in the country. India’s government has promised to spend $350 billion to improve infrastructure, but companies are often plagued by problems like erratic power supply and congested roads and airports that make travelling from one city to another — or even within cities — a tough task.

…

Indian companies themselves are setting up bases in China, both at the request of Western clients as well as for the potential to win outsourcing work from local companies. In recent months, Infosys, Tata Consultancy and Wipro have announced plans to ramp up China operations.

Read the complete article here.