India's advantage over China in the BPO space is its English speaking workforce. But China has gone into overdrive to bridge the language gap. Its time for the Indian BPO industry to sit up and note, says Nita Kaul

With the potential of the Queen's language being unleashed with the outsourcing wave, the ability to speak it well has become a prime asset. That's one powerful reason why India gets pitched so well as an outsourcing destination, apart from her ability to produce quality work. This may be so, but for how long?

The major threat is from China, which is building its English-speaking capacity. According to the Aberdeen group, the worldwide business process outsourcing (BPO) revenues will touch US $ 248 billion by 2005 and the Chinese are desperate to grab a substantial slice of this growing pie.

But they don't speak English as well as we Indians do. After all, we do have the legacy of 200 years of British culture - and language - behind us. So, it is going to be a while before China can catch up.

However, there is no room for complacency, as it does not take long to learn a foreign language. Language experts say it takes 3-5 years at most to learn a foreign language. And if you are as driven as the Chinese, you just might learn the language faster than you can say "outsourcing". An example of how goal-oriented the Chinese are can be seen in their implementation of the one-child policy. This policy was drawn up in the seventies to control population growth. The project was so successful that China's birth rate per thousand population has halved from 33.4 in 1970 to 15 in 2001.

Today, they are driven towards learning the English language and grabbing the 2-3 million jobs that will get outsourced to Asia in the next 5-7 years. And they are leaving no stone unturned to achieve their goal.

While India can be proud of the "2 million-strong English speaking work force", China has close to 250 million people trying to acquire fluency in the English language. There are over 700,000 primary and secondary schools in China and according to the Council Exchange for Teaching in China, virtually all secondary school students are currently studying English.

As of 2002, in Beijing alone, some reports estimate that there were over 1000 foreign language-training centers. A recently-released report by the rating agency, ICRA, suggests that the Chinese government has invested over US $5.4 billion in nine universities to promote the English language and other skill sets. To speed the process, the Chinese have created "radio and television" universities in addition to the traditional schools to meet the huge demand.

While some may say that for China, learning the English language will not be enough to pull in more outsourcing business, what with there being a question-mark on Chinese product and process quality. The fact, however, remains that China is in the process of eliminating its disadvantages.

It already has a solid education system that emphasises technology. It's education system is also cheaper. An engineer in Shanghai costs only US$ 500 a month, compared to US$700 in India according to Businessweek magazine. On the technical front, the Chinese government is setting up software parks and offering tax breaks to fertilise its growing IT services sector.

But even if the Chinese do learn to read and write well, will they be able to speak like the Americans or the English? They don't need to. Not for transaction-based back office work like financial analysis or payroll processing, which is more lucrative. And they may not want to either, especially since voice-based businesses face problems of accent and high attrition rates. Infosys' BPO arm, Progeon, has already decided to minimise its dependence on voice-based business.

The bottom line is that an industry that considers knowing English as a major advantage needs to be careful on not overly depending on it. If China can beat the United States in manufacturing, can it not cultivate the largest English-speaking workforce in the world? Whether China can beat India remains to be seen. But research firm Gartner predicts that the by 2007, China will earn US$ 27 billion in revenue for IT services, call centers and back-office work, matching India's figure.

And for how long can India continue to rely on English as its strength? Now there are other markets like Japan and Europe showing potential for outsourcing for which we have no language skills. Compare this to China, which already shares a cultural affinity with Japan. The goal will be to build newer and alternative advantages fast so that we can maintain the competitive distance with China.

An observation by Adam Smith, in 'The Wealth of Nations' 1776, says it best:, "a merchant is not necessarily a citizen of any particular country, a very trifling disgust will make him remove his capital and together with it all the industry which it supports, from one country to another." It's already happened in India with some American firms, including Dell and Lehman Brothers, taking their call centre jobs back to the US due to issues relating to accents and quality of work supplied by Indian call centres.

We have to appreciate that no advantage is permanent. And the sooner the BPO industry realises this, the faster we can outgrow our weaknesses and move up the value chain.