China is closing the gap on India in the business process outsourcing sector, with many companies turning to the dragon for higher-level BPO activities, states a study by IDC on Asia/Pacific excluding Japan market for 2007. Although India will remain the major hub of BPO activities over the next few years, China, whose outsourcing portfolio primarily comprises processing services, is increasing its momentum by attracting large BPO investment to its cities. According to industry estimates, India has cornered about 10% of total BPO market, followed by China at 3.5%. Cheap labour makes China a lucrative destination for companies.The Indian IT-BPO sector, growing at an estimated 30% in FY07, is expected to garner revenue of $47.8 billion, according to a recent report by Nasscom.

And if it continues to grow at this rate, exports may hit $75 billion by 2010. However, Nasscom president Kiran Karnik had recently said that because of the low degree of globalisation, China would not be much of a threat to India in the global outsourcing market.According to IDC, in order to win key regional deals, BPO service providers require global delivery centres, beyond presence in India or China. As clients demand seamless support, many are seeking vendors who are capable of servicing their outsourcing needs using a combination of offshore, onshore and near-shore locations. The report also predicts 2007 to be a year where corporations will focus more on regional issues and needs within the organisation.