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Offshore outsourcing: China runs the sun, will it rule the cloud too?

Gartner came out with its annual list of the top 30 countries for offshore outsourcing. Despite my complicated relationship with lists (totally sucked in and deeply skeptical), I’ve found the Gartner lineup an interesting window on the global economy over the years. Vietnam, a “best-kept secret” just a few years ago, for example, is now a player, attractive for its English language skills and cultural affinity to the United States.(!!) In Russia, where the former Communist regime fostered a seemingly bottomless pool of brilliant computer scientists and mathematicians, the entrepreneurial class now driving IT outsourcing just wants the government to stay out of its way. Mexico leads the Latin pack, despite the escalating drug violence there.

Per usual, the Stamford, Conn.-based consultancy divides the world of offshore outsourcing into three parts: Americas; Asia/Pacific; and Europe, the Middle East and Africa — EMEA, for short. I’m writing a story on who’s in and who’s out. Spoiler alert: Seven developed countries you know well are off the list. The booting of the seven stalwarts notwithstanding, the general outlines of the offshore outsourcing world really don’t change much from year to year. India is the undisputed leader in offshore IT outsourcing, with China at its heels.

But as Gartner analyst Ian Marriott pointed out to me in our interview about the top 30, a game-changer is looming: cloud computing.

As more IT work is driven through the industrialization of computing, the cheap labor that is such a compelling reason to ship IT work offshore, of course, matters less. Automated work potentially could be done from anywhere, including the United States. That’s a dynamic that will affect the IBMs and Accentures of the IT provider world, with their huge investments in India, as well as the indigenous offshore providers.

As customers map their IT needs to a global economy, offshore providers will need to anticipate not only which services will be needed, but also how much of the work is commoditized and thus potentially could come from anywhere, Marriott said. Some providers will take the niche route.

“We’ll see them looking to build very focused skills, customized for the marketplace,” Marriott said.

As for who will rule the cloud, he’s betting on China to leverage its manufacturing and process capabilities to become a world force in industrialized IT. Soon. Look at what China has managed to accomplish in solar power. Unlike language skills, which can take a generation or more to improve, technology improvement can happen fast. American tech titans, are you listening?

Write to me at [email protected].

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