Noting an increased competition coming from the Indian and dragon cities, IDC says both nations are working towards creating a long-term sustainable competitive advantage.

IDC's Asia/Pacific Global Delivery Index, 2010, also indicates that these countries are investing in technology, infrastructure and talent development.

The Chinese government is leveraging its foundation of the 1000-100-10 initiative that was rolled out in 2006 by the Ministry of Commerce. This initiative aimed to accelerate the country's information technology outsourcing (ITO) and business process outsourcing (BPO) services.

Through this project, 22 cities now have been identified as software and outsourcing locations in China.