Outsourcing
Ministry of Commerce: China’s outsourcing sector growing quickly
2009-11-11
At the 6th China International Service Outsourcing Conference held in Xi’an in December, the Ministry of Commerce of China revealed that the outsourcing industry in China has been experiencing healthy and steady growth against the background of the global financial crisis. The first 9 months of 2009 has seen an increase of 3287 outsourcing companies in China and an increase of 585,000 people employed in the outsourcing industry in China. During this period the outsourcing industry in China has secured a total of USD 12.69 billion in the value of contracts signed, with an amazing Y-o-Y growth rate of 212%. According to the Ministry of Commerce’s blueprint, the outsourcing industry in China’s will achieve USD 30 billion worth of international contracts in 2013, with a CAGR of 43%.
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McKinsey: China’s financial outsourcing industry 14 times behind their US Counterpart
2009-11-10
A McKinsey global partner said that the size of the financial outsourcing market in China was only 1/14 of the size of the market in the US. Two problems exist in the development of this industry in China. First, the services which dominate China’ financial outsourcing market are largely back office processes, such as data entry, while a mature financial outsourcing market features the subcontracting of separate functions, such as accounting, HR, and procurement. Second, in regard to the relationship between the outsourcing suppliers and the clients, Chinese suppliers mostly position themselves as a short term “gap-filler”, in order to provide the extra resources the client needs in the short term. However, in a mature market the suppliers create value by offering more strategic services, such as process optimization and operation improvement.
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Major Chinese software outsourcing players establish the Global Service Association
2009-10-27
Eight leading Chinese software outsourcing providers established the Global Service Association (GSA) in Silicon Valley the other day, the idea of which was Initiated by Hua Yuan Science and Technology Association (HYSTA), a non-profit organization aimed at the promotion of entrepreneurship and career development among Chinese professionals in Silicon Valley,. Quickly expanding at an annual growth rate over 20%, China’s software outsourcing industry is projected by IDC to overtake India as the global outsourcing leader in the next 5 years. HYSTA has a strong network among Fortune 500 companies and strong influence in business circles. Cooperation with HYSTA should give a huge advantage to the GSA’s ability to compete in the global arena.
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First international high-end outsourcing transfer center established in Zhongguancun
2009-10-27
The first international high-end outsourcing transfer center, Xinshiji Sci-Tech Services (XSTS), was established in Zhongguancun Software Park on October, 26, making it possible for Chinese IT service providers to service top global outsourcing clients. Differing from the ordinary outsourcing industry model, XSTS is an international high-end outsourcing transfer center directly established in China by top global outsourcing clients, providing a training and development platform to introduce Chinese players to the high-end market as well as to produce a large group of professionals qualified to manage key operations in a large international company. Providing a chance for China’s outsourcing providers to move up the value chain, the establishment of the center in Beijing is of milestone significance to the development of China’s software outsourcing industry.
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New Chinese Government guidelines for on-shore outsourcing development
2009-10-26
Nine Chinese government departments, including the Ministry of Finance and the National Development and Reform Commission, recently announced the Guiding Opinions on Encouraging the Public and Private Sectors to Outsource in Order to Promote the On-Shore Outsourcing Industry in China. Different from previous government policies, this new decree is aimed at the development of the onshore, instead of the offshore, outsourcing industry in China. Specifically, this guideline puts great emphasis on the training of outsourcing professionals, financial and tax preferential policies, and the branding of domestic outsourcing providers.
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Financial services firms look to back-office outsourcing for expertise and service
2009-10-06
Challenging market conditions force companies to think differently about all aspects of their organization to prepare themselves for recovery. Back-office outsourcing is a solution many firms implement to improve efficiencies, while also adding expertise to this critical function. Some significant changes happened in the last 12 months. When the markets were flourishing, financial services professionals were not paying as much attention to their back-office operations. Now that markets have constricted, companies are looking for ways to optimize this area of their business.
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Indian tech outsourcers aim to widen contracts
2009-10-06
For years, India's big tech firms positioned themselves as a cheap alternative to U.S. and European competitors for tasks such as software maintenance and database upgrades. But the days of 30% annual revenue growth from such work are over due to the global economic recession. Now, Indian companies are racing to broaden the services they offer and compete for higher-level work that usually goes to larger rivals including IBM, HP, and Accenture. They are aggressively pursuing on-site work like managing companies' entire information-technology departments, networks and help desks. They are looking to run external data centers for customers and they are trying to tie all of their services into end-to-end outsourcing packages for clients.
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World's outsourcing market worth $373 billion
2009-09-25
A new report by research firm XMG Global sees the world outsourcing market growing 14.4% in 2009, with India and China as the top two countries. XMG Global singled out India and China as the market's top revenue generators, pulling in revenues worth US$48 billion and US$28 billion, respectively. According to XMG, India will account for 44.8 percent of the global market, while China will hold at 25.9 percent. According to XMG, several factors will impact the industry's market value and dynamics of global sourcing in 2010. These include the economic recovery of Europe and the United States, which will create business process outsourcing (BPO) demand over IT services, as well as the continuing agility and commitment of governments in China and Vietnam to attract foreign investors and improve infrastructures.
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India outsourcing: pay is down, competition is up
2009-09-23
IT workers are getting smaller raises and staying put as leaders TCS, Infosys, and Wipro face a revenue decline and a bigger fight for deals. During a year spent languishing in the doldrums because of the global recession, India's largest outsourcing providers handed out the stingiest salary raises in more than a decade. That's a big change from the boom years of Indian outsourcing, when wages rose regularly by double digits. Now, however, many Indian IT workers are worried about the future and choosing to stay put, dropping attrition rates to about 15%. They have good reason to be concerned. The 2010 fiscal year, which ends in March, will be the first time the industry's top players will see a revenue decline, according to their own predictions.
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