Chinese IT Outsourcing Market Fuelled by Increasing Investment
Source: The Outsource Blog View: 830 Date: 2012-09-19

The Chinese information technology (IT) outsourcing market has been forecast to increase at a compound annual growth rate (CAGR) of 15.1% through the years to 2015.

Growth within the Chinese IT outsourcing industry looks set to be driven by a number of factors including the rapid development of IT infrastructure and mobility services, along with the increase amount of investment from a number of multinational corporations.

However, increasing competition from other offshore destinations could pose a challenge to the growth of this market.

In addition to cheap labour, other drivers for the expansion of the Chinese IT outsourcing market include market deregulation, large-scale investment in technical education, better intellectual-property protection, IT core standards and infrastructure development, and the flourishing Chinese economy.

Despite promising growth, however, China still needs to consolidate its workforce capabilities in terms of English-language proficiency, project-management skills, and experience to step up its challenge to the global market.

While Chinese IT companies are increasingly bidding for international outsourcing projects, they are also leveraging their proximity to markets such as Japan and South Korea, where they have an advantage in both geography and language. The Korean electronics firm Samsung outsourced about US$18.5 billion of business to China in an attempt to lower production costs.

The best Chinese IT outsourcers are gradually incorporating more advanced applications, integration and infrastructure services into their offerings. Some are developing strong embedded software capabilities to work with makers of mobile phones and other hardware devices.

Key companies dominating the Chinese IT outsourcing market include Digital China Holdings Ltd., Fujitsu Ltd., Hewlett Packard Co., and IBM Corp.
The Chinese information technology (IT) outsourcing market has been forecast to increase at a compound annual growth rate (CAGR) of 15.1% through the years to 2015.

Growth within the Chinese IT outsourcing industry looks set to be driven by a number of factors including the rapid development of IT infrastructure and mobility services, along with the increase amount of investment from a number of multinational corporations.

However, increasing competition from other offshore destinations could pose a challenge to the growth of this market.

In addition to cheap labour, other drivers for the expansion of the Chinese IT outsourcing market include market deregulation, large-scale investment in technical education, better intellectual-property protection, IT core standards and infrastructure development, and the flourishing Chinese economy.

Despite promising growth, however, China still needs to consolidate its workforce capabilities in terms of English-language proficiency, project-management skills, and experience to step up its challenge to the global market.

While Chinese IT companies are increasingly bidding for international outsourcing projects, they are also leveraging their proximity to markets such as Japan and South Korea, where they have an advantage in both geography and language. The Korean electronics firm Samsung outsourced about US$18.5 billion of business to China in an attempt to lower production costs.

The best Chinese IT outsourcers are gradually incorporating more advanced applications, integration and infrastructure services into their offerings. Some are developing strong embedded software capabilities to work with makers of mobile phones and other hardware devices.

Key companies dominating the Chinese IT outsourcing market include Digital China Holdings Ltd., Fujitsu Ltd., Hewlett Packard Co., and IBM Corp.
 

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