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The Chinese IT Services industry is currently estimated at US$ 23 billion. According to analysts, the market is projected to grow at an annual rate of 30% over the next five years, giving China the remarkable opportunity to overtake India as the outsourcing superpower of the world. It is estimated that by 2015, Chinese outsourcing providers could generate $56 billion in annual revenue.
Worldwide, the strongest global demand for outsourcing services comes primarily from the domestic (Chinese) market, followed by Japan and other Asian countries. There has been a steady increase in American and European demand for Chinese outsourced services, mostly within the IT & Business Process outsourcing sectors, thus driving Chinese-based outsourcing providers to these regions in droves.
Traditionally, companies have outsourced to China because of the cost & value benefits of its vast and inexpensive talent pool. Today, more and more companies are going to China for many other reasons, including:
- Language: English proficiency levels are now comparable to India; English proficiency is required for BA and MA degrees.
- Legal: The Government is passing new laws protecting intellectual property and private ownership and domestic/foreign partnerships.
- Infrastructure: Utilities and roads are more robust than in India, and bandwidth and office space are plentiful and available at low cost.
At HYSTA 2009
For these reasons, among others, outsourcing to China has become part of the global strategy of many companies.
Though it’s obvious China has emerged as a global outsourcing leader, within China there is not yet a clear market leader. Perhaps one of the innovative companies that demonstrated their capabilities at last week’s HYSTA 2009 Annual Conference will leap to the forefront as this market explodes in the coming years.
Some companies to keep an eye on include Achievo, Beyondsoft, Freeborders, Neusoft, Symbio, and VanceInfo Technologies to name a few, which have their roots in Software Developers, Systems Integrators, Software Testing and Localization.
HYSTA (Hua Yuan Science and Technology Association) aims to promote entrepreneurialism and career development among Chinese professionals in Silicon Valley, and to facilitate networking and exchange of business ideas among successful Chinese entrepreneurs and executives in the Silicon Valley and mainland China.
I was searching for good blogs to read until I dropped by yours. Interesting topic and is hoping to read more of your future posts.
China’s growth in the IT business should be considered as a welcome change. I think that there is a need to think beyond India, and consider other countries, such as China and the Philippines, when a company ponders outsourcing as a cost effective way of running their business.
Thanks for the comments. China has a very strong domestic economy and with the proximity to the Asia Pacific Region, as a result, China has been shielded from the Global Economic slow down since 2008.
In addition to VanceInfo Technologies (NYSE:VIT) which was listed in the New York Stock Exchange since 2007, two China-based outsourcing companies, IsoftStone (ISS) and hiSoft (HSFT) also listed in the USA stock market in 2010. Chinese companies are indeed going global.
As many people are comparing China to India, I’d like to see it it as an overall balanced ecosystem because the world spent a trillion dollars in Outsourcing each year, the pie is huge enough for everybody.
Leslie Yuen
Executive Director
HYSTA-CGSA