Call Center Services, Outsourcing Services, Outsourcing Projects
Experienced a rapid growth and accumulation during“the Eleventh Five-Year Plan”, Chinese service outsourcing industry has stepped into a stably growing development stage and has achieved an impressive performance at the beginning of the “the Twelfth Five-Year Plan”. The statistical data of the first half of 2011 indicates that China has signed 48107 service outsourcing contracts, which are equivalent to 17.76 billion US dollars, increased by 83.9% year-over-year. The execution amount is 13.3 billion US dollars, increased by 96.7% compared to the same period of last year, among which the amount of contracted international service outsourcing is 12.94 billion US dollars, risen up to 81.5%. The execution amount is 9.49 billion US dollars, increased by 90.9% year-over-year.
Devott deems that it is the critical period for Chinese service outsourcing industry leaping during the period of “the Twelfth Five-Year Plan”. The industrial concentration will be further enhanced. The industry will gradually shift toward to the high end of the value chain. Meanwhile, the overall industry will emerge more fresh features.
1. Offshore business grows fast in the first half of 2011.
Having suffered the financial crisis, despite of confronting the test of “double dip” and “credit crisis”, Chinese offshore service outsourcing business still retains the position of second largest contracting center in the globe relying on the advantages of improving infrastructure and investment climate, stable human resource supply and operation cost.
According to the statistics of the first half of 2011, the amount of international service outsourcing contracts that China signed is 12.94 billion US dollars, increased by 81.5% year-over-year.The total amount of offshore outsourcing accounted for 73% of total contract, among which the United States and Japan are the main nations that China is always targeting on. Since the embryonic stage of service outsourcing industry to today, offshore outsourcingindustry has achieved a significant rapid growth. It is estimated that China will become the largest offshore service outsourcing market in the world by 2015.
In the first half of 2011, cities and regions that experienced the fastest growth in offshore outsourcing business is divided into two categories:
Ones are the cities and regions like Dalian and Shandong where natured with geographic advantages. These two regions possess obvious advantages and convenience in contracting from Japan and South Korea. In the first half of 2011, Shandong Province signed 2087 copies of offshore service outsourcing contracts, increased by 107.2%. The contract amount is 0.67 billion US dollars, increased by 156.6%. The execution amount is 0.368 billion US dollars, risen by 186.8%. Among them, the outsourcers of offshore service outsourcing come from 90 nations and regions, 53 more than the same time of last year, 9 of which go beyond thousand US dollars of their contract amount. 208 service outsourcing companies have started offshore business, increased 74 companies year-over-year. Therefore, the autonomous industry is consistently increasing as well as the TOP 3 outsourcing businesses (ITO, BPO, KPO) and market diversification wholly facilitate the development of Shandong’s offshore outsourcing.
The other ones are the emerging cities like Chengdu and Chongqing. Even though located in Midwest where lack of geographic advantages for offshore outsourcing, but these cities strengthen the outsourcing business and make a rapid progress through their own efforts, other advantages and logistics altering. Statistical data of 2011 indicates that the contract amount of offshore service outsourcing and the offshore execution amount of Chengdu from January to May respectively increased by 13% and 76.7%. Chongqing service outsourcing companies signed offshore service outsourcing order agreements of totally 0.24 billion US dollars with foreign enterprises, increased by 220% year-over-year. The development of service outsourcing industry facilitates a significant growth in total amount of virtual goods transaction on E-commerce platform.
2. The Non-Model Cities of Service Outsourcing Industry Rapidly Enhances.
In recent years, apart from the 21 service outsourcing model cities certified by Chinese Ministry of Commerce, the non-model cities are rapidly rising. Although non-model cities have less government supports compared to model cities, we can see that thedifferentiated development of non-model cities formulates the specific path of industrial development according to their distinctive advantages and applies more flexible and advanced philosophy, so as to facilitate the rapid development of local service outsourcing industry. Some fast-developed non-model cities even have gone beyond model cities and broke into TOP 20 service outsourcing cities.
Let’s take the data of Qingdao, Jiangyin, model city A and B as examples:
As can be seen from the figure, the data of Qingdao and Jiangyin are approximately as twice much as some model cities. The rise of Qingdao is inseparable from the facilitation and development of Shandong Province. Qingdao has a great geographical advantage for international outsourcing business to Japan, Korea, the United States and Europe. Moreover, the comprehensive business costs such as housing and land rent and human resource costs are more competitive than Beijing, Shanghai and Shenzhen.As for Jiangyin, its rapid upgrade of service outsourcing depends on the momentum facilitated by local famous enterprises and the expansion on the focused areas of the industrial park. By June 2011, the contract amount of service outsourcing of Qingdao is 0.275 billion US dollars, increased by 323% year-over-year while the execution amount is 0.14 billion US dollars, increased by 221%. Up until now, the number of the registered service outsourcing companies of the city is 200, which stimulates 30000 graduate employments. The contract amount of service outsourcing of Jiangyin is 0.261 billion US dollars and the offshore contract amount is 0.135 billion US dollars, respectively accounted for 58.26% and 56.87% of the plan. Both two items of data exceeds the annual level of 2009.
3. Theacceleration of industrial transfer drives non-first-tier cities experiencing a prosperous development in service outsourcing industry.
Driven by industrial elements such as cost and human capital, the gradient transfer tendency of Chinese service outsourcing industry has been intensifying since 2009. Numerous service outsourcing enterprises cast their eyes on Midwestand second or third–tier cities and regions. The international famous companies such Accenture and IBM have entered the second and third-tier cities to develop their outsourcing businesses. Up until now, Accenture has established 6 branches in Greater China, including Dalian. And IBMhas established multiple Cloud Computing Data Centers in Wuxi of Jiangsu Province, Dongying of Shandong Province and Chengdu of Sichuan Province, etc. Meanwhile, many second and third-tier cities are consistently strengthening the effective integration of service outsourcing industrial resources, regarding the service outsourcing as the strategic industry in the future. Therefore, the second and third-tier cities represented by Xi’an and Nanjing are experiencing a prosperous development of the service outsourcing. Devott’s statistics indicates that by the end of 2010, Xi’an has formed the service outsourcing industrial structure which regards Research and Development on service outsourcing as the main body, multinational companies and domestic giants as the leaders and simultaneously develops ITO and BPO. The total amount of offshore business is 0.292 billion US dollars, increased by 30.11% year-over-year. It is estimated that by 2015 the total output will achieve 130 billion Yuan while the service outsourcing companies will reach 1500, creating jobs for 21 hundred thousand people. For Nanjing, the execution amount of service outsourcing in the first half of 2011 is approximately 2.5 billion US dollars, increased by 143% year-over-year. Many cities are designing distinctive outsourcing development route based on self-advantages and are set as the national model. For instance, Taizhou of Jiangsu Province is focusing on pharmaceutical outsourcing in order to facilitate the outsourcing industry, or Kunshan, nearby Shanghai, is focusing on the development of financial outsourcing and has made a rapid progress.
4. Service outsourcing develops prosperously in each city; Yangtze River Delta possesses the leading position.
DSORC will consistently observe, summarize and analyze the service outsourcing data of each Chinese cityshare our discoveries and insights with the peers through Chinasourcing portal. Meanwhile, we expect to accept the focus and advice from each city and industrial colleagues.
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