The Comparative Analysis Of Influencing Factors Of The Service Outsourcing Competitiveness Of China And India Based On The New Diamond Model

With the background of economic crisis in the U.S.A and the Europe, the processof globalization is accelerating and deepening. As the major driving force of globalallocation of resources, the Multi-National Corporations have to reduce the cost ofbusiness operation, and focus on the core business in order to gain internationalcompetitiveness. The rapid development of network make communication moreconvenient in worldwide. The MNCs outsource non-core business to the countrieswith lower labor cost, which boosts the rapid development of service outsourcingindustry. India gets a lift on the train of service outsourcing and becomes the office ofthe world. As the world’s second largest economic power, China has betterinfrastructure, low labor cost and enormous potential of the domestic market.Compared to India with the similar environment, the competitiveness of China’sservice outsourcing industry is much weaker than India’s; and China’s market share ofworld is much smaller.In this context, this paper makes a comparative analysis between the influencingfactors of service outsourcing competitiveness of China and India, by modified“Diamond Model”, which has practical meaning. Based on the data after1998ofservice outsourcing industry by regression, the paper gets the conclusion that theinfluence of government, the development of infrastructure and the expenses on theresearch and experiment are most important factors affecting the competitiveness ofservice outsourcing in the two nations. On the basis of qualitative and quantitativeanalysis, the paper proposed that to promote the rapid development of China’s serviceoutsourcing industry, China should adopt the policy as taking domestic demand as theleading and also develop foreign demand.