Tuesday, August 08, 2006

Outsourcing: China Faces an Alarming Talent Shortage in the Future

As the world’s manufacturing workshop, mainland China has been supplying everything from toys, textiles to computer chips with the help of its huge supply of low-cost workers. A country of millions of university graduates, one would think it to be a forgone conclusion it will one day become a Goliath in the off-shored / outsourced IT and business process outsourcing.

In order to sustain an economic growth and avoid a talent crunch, China will have to ensure it produces more graduates capable of being employed in world-class companies, local or international. This is absolutely essential if China has to evolve out of its domination of the manufacturing sector to future dominance in the services sector as its economy develops and matures.
There are those who argue that willingness to work long hours should compensate for deficiencies in suitable Chinese talent. While this holds true to some extent on the factory floor, it is unlikely to make a major difference in services that would only highlight the skill deficiencies. These two factors combined with the difficulty in reaching more than half of China’s widely scattered pool of graduates prohibits multinational companies from hiring in China.

Again, multinationals desirous of setting up an off-shoring / outsourcing base in low wage China find it difficult to recruit the right kind of talent, is because of stiff competition for home-grown talent from domestic and multinational companies. Unlike Philippines and India whose economy is growing at a less brisk pace than the Chinese economy, working for an off-shoring / outsourcing firm is a decidedly good option. That is not the case in China as there are other suitable alternatives for the right kind of graduate with many more jobs in export manufacturing.