China Software Outsourcing Company

Offshore Software Development Trend and Chinese Marketing Development

21 April, 2010
Written by Daisy Wang
Beijing RayooTech Co., Ltd.

According to the China Electronic Information Industry Development Institute (CCDI) estimated that the global software outsourcing service market remain 7.6% compound growth in the next few years, and will exceed 500 billion US Dollars in 2011. Meanwhile, the global offshore outsourcing business is growing at over 20% annual rate, the global offshore outsourcing market will reach 85 billion USD in 2011, which accounting for 17% of the total global market. Thus, we can see that the development of international service outsourcing trend is very rapid, mainly demonstrate in the following aspect:

-The business is expanding with more high technology. With the development of information technology and network technology, the technical knowledge of offshore software outsourcing is required to continuously improved, which is leading to the global knowledge-based outsourcing services are developing gradually. Many companied not only outsourcing the low-end service, like data input, file management, etc, but also transfer the risk management, financial analysis, R&D, and other high technology content and high-value services to be outsourced.

- Strengthen the offshore services; the number of the offshore service outsourcing companies is increasing. Due to the high level of education and low wages of the developing countries, an increasing number of countries select offshore outsourcing way for their business grow. For example, GE announces that 70% of their business is adopting offshore model; McKinsey forecast that the offshore outsourcing of U.S. white-collar jobs will grow by 30% in the coming 5 years. More companies are paying attention on offshore outsourcing.

- The combination of BPO (Business process outsourcing) and ITO (Information Technology Outsourcing) service is the new trend of the global outsourcing industry. From the perspective of market structure, the global outsourcing service is transferring gradually from the basic technical level of business outsourcing service to high-level business process outsourcing service (BPO), and the growth of BPO is continue maintain the higher rate than ITO. In 2006, the global ITO market is 2170 billion USD, up 6.1%, and accounting for 62.2% of the total outsourcing service market; the global BPO market is 1320 billion, occupies 37.8% of the total market, but the growth rate is higher than ITO.

As the business has expanded, clients tend to select the ITO and BPO combination services, which to meet the company’s technical and business needs. That is, the outsourcing company not only provides the simple technical outsourcing services, but also supplies the service outsourcing, since the business process and technologies becoming more and more closely. If there has no good technology platform, the enterprise will not complete the high efficient business processes smoothly.

-China and India become the most attractive “offshore outsourcing” market in the world. With the language, the scale of the professional talents, industrial policy and service quality advantages, China and India has become the world leaders in the global outsourcing industry, and accounting for 80% of the offshore outsourcing market.

Although the development of service outsourcing in China started late, relatively small scale, but with good investment environment, abundant and cheap labor costs, huge service outsourcing market, China has become competitive rival with India. A survey shows that there is seldom respondents had the intention to outsourcing service to China in 2004; however, this proportion had increased to 40% in 2006.

China has the following advantages in offshore outsourcing industry:

1, China has the stable political environment, and good macroeconomic situation. Among world top 500 companies, nearly 450 have invested in China, which means China has a perfect investment environment.

2, The Chinese government has the positive guidance towards to outsourcing service, which have launched a series of preferential policies to encourage outsourcing.

3, The infrastructure and investment environment is improved lots, also the advanced communication facilities, adequate energy supplies, complete facilities and equipment, ideal investment environment, and the tax policy is getting stability and transparency.

4, China has a large number of high-quality, low cost professional and technical personnel. It is calculated that the cost of software talents in China is only 70% of India, 1/8 of the United.

5, China has been relatively successful explored the Asian market; there has the obvious advantages for China to carry out the long-term and stable partnership with the global clients.

[ All rights reserved, reprint, please specify source and the author. Thank You. ]

Download ' Offshore Software Development Trend and Chinese Marketing Development ' Article