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After information technology, it's now the turn of Indian business process outsourcing services companies to harness China as a delivery location.

With a large talent pool yet to be tapped and a growing number of English speakers coming out of colleges in recent years, China is becoming an attractive offshore destinations for the Indian BPO sector.

Many BPO majors, including Aegis, TCS BPO and Hinduja Global Solutions, are either looking at entering or expanding their presence in China.

Indian IT majors such as TCS, Infosys, Wipro, HCL Technologies and Mahindra Satyam, are already present in China.

These companies are mostly servicing global clients from these centres.

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Recently, Infosys said it was setting up its own campus in China, the first by any Indian IT company there.

However,  BPOs were maintaining a cautious approach.

"We have been trying to enter China through a joint venture, as it is difficult to enter the market on your own. Thus, it is taking a long time. However, we hope to close the JV in China by the end of this year," said Partha Desarkar, global CEO, HGS.

The company had been trying to crack the China market for long.

TCS employs about 500 people in China across two centres for its BPO business. It is planning to expand its presence.

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TCS BPO global head, Abid Ali Neemuchwala, says Indian BPO firms are no longer merely cost-centric but are focusing on harnessing talent from across the globe for enhancing domain capability.

According to Nasscom, China has the potential to develop a large IT-BPO industry.

Underlying this is substantial domestic market potential, a sizable educated workforce and strong government support on developing the IT-BPO sector, says a Nasscom report.

"In non-voice BPO services, China will take over India as an attractive destination. In the next four years, you will see a generation of English-speaking Chinese coming up. They have worked really hard in the last 10 years to improve on this," said Aparup Sengupta, CEO & MD of Aegis.

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Aegis did not have a presence in China so far and is now thinking of centres in the country.

"We are looking at it," said Sengupta.

A few BPO companies still maintain a cautious approach.

Rohit Kapoor, president and CEO of EXL Services, said: "We did explore China last year. We have decided that it's not the best time for us to go there. The markets more interesting to us right now, in terms of onshore capability, are the US, South Africa and Latin America."

Genpact, among Indian BPOs, has considerable presence in China.

The company owns five centres there, which employ a little over 3,000 people.

Some analysts, however, feel the IT -BPO industry in China is still in its early phases.

Frequent comparisons with India and commentary positioning China as a substitute destination is misplaced, they say.