China's outsourcing industry has become increasingly dispersed regionally. Due to the cost increase in primary cities such as Beijing, Shanghai, Guangzhou, and Shenzhen, service providers are moving their operations to 2-tier cities. At present, all major offshore outsourcing service providers in China have established themselves in cities such as Nanjing, Xi'an, Chengdu, Chongqing, and Wuhan, which has somewhat alleviated the pressure of rising salaries. This tendency is likely to grow in the years ahead. At the moment, China's outsourcing market is still centered in Beijing, Shanghai, and Guangzhou; bridged by the international ports of Dalian and Shenzhen; and supported by Nanjing, Xi'an, Chengdu, and Wuhan. On the other hand, number of model cities develops smoothly. At February 25, 2010, Xiamen became the 21st Outsourcing Model City in China.
Post-crisis era is the booming period of China's service outsourcing industry. The well development shows the outsourcing industry keeps searching for higher end level as BPOs and even KPOs. Until January 1st 2011, there are 12706 outsourcing enterprises in China with 2.328 million employees. Degree holders take 70.9% of employees about 1.65 million. The amount of all service outsourcing enterprises in China undertaken contracts is 27.4 billion USD, the execution amount of the contracts is 19.8 billion USD, increases 37% and 43.1% compare to last year. International (Offshore) service outsourcing contract takes large share of the total amount. In 2010, total offshore contracts is 19.83 billion USD, execution contract 14.45 billion USD, increases 34.3% and 43.1% as last year. In 2010, there increases 3756 service outsourcing enterprises and 781 thousand employees, where degree holders are 486 thousand as 62.2% of new employees.
Currently, China is the second large country with CMM/CMMI certified. China has total with 1300 CMM/CMMI certificates. By the end of 2006, 38 software companies in China were Capability Maturity Model (CMM) 5 certified, 23 companies were CMM4 certified, and over 200 were CMM3 certified. In addition, 2,136 companies have obtained service integration qualifications. Large Joint-Ventures organized by Indian BPO and ITO providers in China have also accelerated the development of China's BPO and ITO capabilities. More and more buyers are recognizing China's strengths in its growing number of outsourcing service providers and improved quality and customer satisfaction with its outsourcing projects.
Outsourcing service providers in China have also improved their competitive edge through mergers and acquisitions (M&A). Since 2006, the industry has seen rapid growth in M&A, indicated in its change in market share. In 2005, the 10 biggest outsourcing service providers in China had market shares of about 24.2% each, which by 2006 increased to 30.7%. Among these service providers, only companies active in the Japanese market continued to rely on business growth as M&A in this market were rare in the last two years. M&A as one of the best way for outsourcing enterprises to gain larger scales, and the speed is never slow down. In 2010, Neusoft acquires Giantstone and Zhong Bo Ke Chuang to empower their sustainable competitive advantage. On April, 2010, Hisoft acquires Echo Lane, extend business to Cloud-computing. ChinaSoft International acquires Han Consulting to look forward on higher end. iSoftStone mergers with Ascend Tech. enhance global service ability of financial industry.
Some large high-performance outsourcing service providers have adopted the strategy of "going global" and managed to cultivate international markets. Others established R&D, marketing, and service institutions abroad, trying to get close to outsourcing buyers' markets and work out solutions that can meet both the business standards of service providers and special requirements of service buyers. For example, Ufida established a branch in Tokyo, Japan in 2006. Langchao expanded its share in the embedded software development outsourcing market in Japan by merging with Japanese software company, Shinwa. iSoftStone set up its first offshore development center in Korea. Transnational M&A are also an important means for outsourcing companies to cultivate overseas markets. For example, at the beginning of 2007, the hiSoft (International) Group bought U.S. IT solution provider, Envisage Solutions. To expand its share of the embedded software development outsourcing market in Japan, the Langchao Group merged with Japan's Shinwa's outsourcing department. In November 2006, Insigma invested US$7 million to acquire 51.5% equity of an overseas outsourcing company, Comtech Gems, which was a partner of Microsoft U.S. and Microsoft China. By "going global," China's outsourcing companies are cultivating markets on a global scale. Its outsourcing service chain is extending far and beyond, catering to more and more customers