Strong political support

China's government considers the future development for service outsourcing industry from the early as 2006. After financial crisis, we can see the great growth of ITO and BPO in China. The Twelfth Five-Year Plan, it further promotes "Thousand, Hundred, Ten" Project. Related supporting policies can be classified into three levels. The top tier includes proposals in the Twelfth Five-Year Plan announced in 2011 to develop the outsourcing industry on a large scale. There are ten China outsourcing industry trends to watch in 2011.

1. Explosive growth continues in China outsourcing industry and industrial scale forms. The sufficient human resources, the scale of outsourcing industry cluster, the rise of native leading outsourcing industry, strong government support and great potential foreign outsourcing needs promote fast growth and help to realize the industrial scale.

2. Central and local governments will issue the standards of outsourcing industry, coming into being scientific and reasonable comprehensive evaluation system. Devott and international business city named Flower Bridge combine to research the competitiveness of China outsourcing Industry Park. 3. Government will issue more practical policy to improve the competitiveness of China outsourcing market. The twelfth Five-Year Plan will set out effective and enforceable policy to support the development of industry.

4. IT outsourcing industry enters the period of late recession and it is inevitable reform and optimize IT service. With the emergence of cloud computing, PDA and other mobile devices, more and more companies begin to focus on mobile business. Devott predicts that IT strategic outsourcing and mobile business technique are the trend of ITO.

5. As the growth engine of information industry, BPO will become the support focus of national policy. BPO has been considered as the same status of IPO. During the twelfth Five-Year, BPO needs from government and important industries are predicted to increase substantially.

6. Outsourcing industry expands to high-end advanced business areas. Our KPO industry is still in the preliminary development stage. Devott predicts that more enterprises will involve in KPO area to quicken the step towards high-end area of value chain.

7. Vertical-industry-specific outsourcing will be more favorable, particularly finance outsourcing. The traditional division of ITO, BPO and KPO blur gradually and the providers pay more attention to the comprehensive service ability and industry experience in a vertical industry.

8. With the frequent domestic disasters, many enterprises focus on disaster backup industry. Various kinds of disaster backup centers have been completed, and disaster backup service will be a new profit growth point of comprehensive information service of Telecom operators. Devott predicts disaster backup market will release great potential in the twelfth Five-Year.

9. The age of cloud outsourcing based on "cloud" platform and "cloud" model is coming. The appearance of cloud outsourcing shapes a main trend of outsourcing industry and brings development challenge and opportunities for outsourcing enterprises.

10. Another hotspot is the outsourcing that relies on The Internet of things. The development of The Internet of things has been ranked as one of the three development goals of information industry. With the government supportive policy, domestic outsourcing service relying on The Internet of things will be an upsurge of outsourcing industry.

Well-educated workforce

China produces a great number of engineers and IT technicians every year. In 2009 alone, over 970 thousand graduates majored in IT engineering. Although the resource supply is always a challenge in the outsourcing business in general, China has ample supply of trainable entry-level professionals, which forms a solid foundation for the country's outsourcing industry. In addition, China's employee turnover rate is lower than 15%, compared with over 25% in India. Another favorable condition is the low labor cost. China's annual salary increase rate is expected to remain between 5% and 8% in the years ahead, giving it a labor cost advantage. To further promote education in the outsourcing field, the MOC and other state agencies have launched a series of special outsourcing training programs.

Mature infrastructure

Following 20 years of economic development, China's transportation, telecommunications, and network infrastructure have rapidly grown and improved, some reaching the international standards of developed countries. Compared with that of developed countries, China's transportation, telecommunications, and network infrastructure are more cost effective, providing a solid foundation for the outsourcing business. China also has obvious advantages over other service providers, including high-speed Internet and broadband access, stable and uninterrupted dual power supply in main software sites, and around 150 airports that connect most of the primary and secondary cities. The low cost of IT infrastructure hardware further strengthens China's cost advantages. In terms of China's software environment, it has a good cultural environment, many outsourcing parks that are ideally located, as well as many comprehensive support facilities providing convenience to service providers, all of which significantly attract local and international service providers.


China's proximity as well as linguistic and cultural similarities with countries in North Asia are giving it a leading edge as an outsourcing destination. Cities in Northeast China such as Dalian and other regions have gained ground in the outsourcing markets of Japan and Korea.

Large-scale manufacturing industry

In China's developed regions such as the Pearl River Delta, the Yangtze River Delta, and the Huan-Bohai Bay, industrial clusters form a firm foundation for the international transfer of service and outsourcing skills. China's status as a global manufacturing center gives it a unique advantage in providing offshore R&D services—an emerging industry. As it developed its manufacturing industry, China has realized the importance of protecting IP and has begun to address issues that are important to Western countries. Together with the smooth grow of manufacturing, patent applications growth rate keeps stable. In 2010, authorities received 1.222 million applications, increases 25.1 compare to 2009. Local applications are 1.109 million takes 90.8%. SIPO granted for inventions, Utility Model, and Designs are 815 thousand, increases 40% compare to 2009. In which, inner-commissioned items are 741 thousand takes 90.9%.

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