1 Status of Jiangsu Software and Information Service Outsourcing Industry

The global service outsourcing industry develops very quickly and the scope of business is expanding as well. As the hot spot of the international industrial transfer, the service outsourcing is taking a shape with the globalization now. At this stage, the Chinese service outsourcing industry reflects the outstanding cost advantage. With the improving delivery capacity and fast development, it will become the next desination of the international service outsourcing industrial transfer.

In 2007, Jiangsu software and information service outsourcing industry witnessed a rapid development. Competency of the software and information service outsourcing is upgrading. In other service outsourcing industrial bases striking achievements can be easily seen as well.

1.1 General Industrial Status

1.1.1 General Information

In 2007, the market size of Jiangsu software and information service outsourcing is 2.03 billion US dollars (data from CSIP), of which ITO is 1.57 billion US dollars and BPO is 0.46 billion US dollars.

Jiangsu is one of most important offshore outsourcing areas in China and meanwhile owns the needy domestic market with great potentials. In 2007, the market size of Jiangsu offshore outsourcing is 0.48 billion US dollars. The domestic market size of Jiangsu software and information service outsourcing is about 76.4% of the total, about 1.55 billion US dollars, of which includes service outsourcing needs of international corporations and business needs of domestic enterprises.

i. Status of Offshore Outsourcing Market

In 2007, the offshore market size of Jiangsu software and information service outsourcing is about 0.48 billion US dollars, of which the ITO takes the biggest share. It mainly focuses on the software service outsourcing, particularly software development and maintenance. While for BPO, the offshore outsourcing business focuses on customer service.

From the geographical perspective, the outsourcers include Japan, South Korea, US, Hong Kong and Macao, South East Asia and West Europe etc. Japan takes the biggest market share and the American market grows most quickly.

Japan is the No. 1 outsourcer in all nations. Its clients are about 56.6% of the total. Predication of outsourcing revenue from 2007 to 2010 will maintain a compound annual growth rate of 18%.

America is second biggest outsourcer with the client proportion of 32.3%. Projection of outsourcing revenue from 2007 to 2010 will rise with a compound annual growth rate of 40%.

The client proportion of South East Asia, Hong Kong and Macao is about 5.3%. The West European client proportion is about 4.4%. They are all major offshore outsourcers of Jiangsu software and information service outsourcing. It is anticipated that from 2007 to 2010, the compound annual growth rate of the outsourcing revenue will be 6.6%.

ii. Status of Onshore Outsourcing Market

Jiangsu software and information service outsourcing has also a huge domestic market with great demands. The onshore market size is about 76.4% of the total, about 1.55 billion US dollars, equivalent to about 12% of the whole Chinese domestic market of software and information service outsourcing.

For ITO

The onshore business of the Jiangsu software and information service outsourcing market focuses on the ITO. Among ITO businesses, software development and testing are the major ones. Over 82% software and information service outsource enterprises have software development business. It is the biggest business in the Jiangsu ITO service market and also the quickest developing subsidiary market.

For BPO

Though BPO enterprises in Jiangsu are less than ITO enterprises, about 25% of the total, they have a wide variety of businesses like R&D and design, back-office data processing, call centre, financial management, human resource management and client management etc. Of those businesses:

Financial management outsourcing. Though the 2007 financial management market in Jiangsu is relatively smaller, the finance and accounting outsourcing market in the upcoming 4 years will remain at a high growth rate of over 25.6%.

Customer service outsourcing. The needs of Jiangsu customer service outsourcing come mainly from discrete manufacturing (equipment manufacturers like home appliance and IT), telecom and finance industries.

Human resource outsourcing. Jiangsu human resource outsourcing has reached a relatively good level and in the upcoming 4 years, its outsourcing market will remain at a high growth rate of 29.3%.

iii. Industrial Status of the Outsourcing Markets

The markets of the Jiangsu software and information service outsourcing mainly lie in the industries like manufacturing, finance, telecom and energy, to which the software and information service outsourcing is more acceptable. All these industries concentrate on ITO businesses, such as software development, technical support, and BPO businesses, such as data centre, call centre.

The characteristics of the industrial distribution are highly related to the strengths of Jiangsu in these fields. The stronger enterprises are, the deeper they have understanding of the necessity and urgency of outsourcing business and higher recognition to the outsourcing. At the same time, fields like traffic and transportation, retailing/consumables, trade and government in Jiangsu are also willing to accept service outsourcing. A group of enterprises are coming forth, catering for different industries, which will be the new development orientation of Jiangsu software and information service outsourcing.