shcri.com - Outsourcing refers that enterprises outsource their non-core business to other enterprises, so that the enterprises can lower the cost, raise efficiency and optimize their core competitiveness. Currently, there are over 3,000 service outsourcing enterprises in China. They would support software development and project maintenance, or be private teachers, securities and even doctors of foreigners through Internet, or establish call centers in their cities for multinational companies.
Economic globalization is now developing into a new stage, with global industries transferring from manufacture industry to service industry. Service outsourcing has become a major trend of the development of service globalization. Since the end of 1980, some multinational companies of developed countries have begun to outsource their non-core business of IT service to those professional service suppliers with lower cost so as to save their own cost and raise operating efficiency and core competitiveness. After rapid development of 20 years, today’s service outsourcing industry has owned a considerable scale. Its business has expanded from original IT Service Outsourcing to higher-level business process outsourcing, both of which have become the main business of current service outsourcing industry. It is predicted that the value of global offshore service outsourcing market will reach at least USD 1.6 trillion by 2020.
Chinese service outsourcing industry is still in the initial stage, but it has huge potential. China has huge labor resource, complete infrastructure and growing economy. Integrating the rapid expansion and development of domestic offshore service outsourcing market will become a new strength in international competition.
As the statistics of China’s Ministry of Commerce shows, as a contractor, the value of Chinese international service outsourcing contracts exceeded USD 10 billion, with 152% increase YOY. Over 8000 service outsourcing companies hired 700,000 more employees, approximately 500,000 employees among which were graduates, with 12% increase YOY. In the previous five months of 2010, 1,105 new service outsourcing enterprises were established with 182,000 new employees. The value of national service outsourcing contracts reached USD 5.50 billion, with 139.2% increase YOY.
General Office of the State Council of China issued documents on promoting the development of service outsourcing industry and 17 policies in 2009. Thereafter, in April 2010, the State Council issued documents on encouraging the development of service outsourcing industry in order to provide a favorable political environment for Chinese service outsourcing industry.
Nowadays, the popular international trading mode for service outsourcing is intensified outsourcing, namely a project is firstly outsourced to main contractor then to other contractors level by level. Only large enterprises have capability to obtain the main contract. However, the factors that hinder Chinese service outsourcing industry are scale and brand. Because most enterprises are nascent with small scale and ordinary brand effect, it is hard to attract large orders. The leaders of China’s Ministry of Commerce are discussing the support for M&A of service outsourcing industry by investing more money. At present, foreign enterprises are lack of funds while capitals in China have ample liquidity. So the price is now favorable for M&A. Since the crash of overseas capital market in 2009, the assets of many enterprises plummeted drastically. When Chinese enterprises are processing M&A overseas, some Indian enterprises begin to acquire some service outsourcing companies in Delta Region of Yangtze River in China, through which they indirectly get Japanese orders.
In order to get rid of the influence of financial crisis soon, many multinational companies and financial institutions will outsource more business to other countries and regions so as to reduce their costs.
From this report, readers can obtain more information:
-Development of Global and Chinese Service Outsourcing Market
-Policy Climate of Chinese Service Outsourcing Market
-Competition on Chinese Service Outsourcing Market
-Major Enterprises in Chinese Service Outsourcing Market
-Factors affecting Chinese Service Outsourcing Market
-Trend for Chinese Service Outsourcing Market
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