Attachment1 Basic Concepts of Software and Information Service Outsourcing

Definition

The software and information service outsourcing is an IT-based service mode. It refers to that the enterprise shifts the work internally undertaken before to the external professional service providers to finish with their intellectual labors in order to engage available resources in its core competency building, in so doing, the enterprise can realize the reduction of costs, increase of efficiency and improve its flexibility and responsiveness to the market and also optimize the objectives of the core competency. This kind of outsourcing adopts the information and communication technologies as the service delivery way and intellectual labors are the main service providers.

In recent years, Jiangsu-based software and information service outsourcing stride rapidly and healthily, having become an important trend and new growth point in the software and information service outsourcing industry.

Classification

The software and information service outsourcing business can be classified by two dimensions: enterprise function and enterprise activity level.

i. Classification by level

The enterprise activity can be divided into strategic, functional and operational by the type of business. The software and information service outsourcing can be classified into three levels based on the real markets faced by value chains of the outsourcing enterprises: strategic, functional and operational outsourcing. Of them, the operational outsourcing refers to that the enterprise transfers one business or one or multiple links of given business to an external service provider for management and implementation. The functional outsourcing refers to that the enterprise entrusts an external service provider with the management and implementation of one or more complete business processes or functions. The strategic outsourcing is the service targeting on the strategic planning of the whole enterprise and re-orgnization of the whole business process. This kind of outsourcing has the highest strategic value and may influence the strategic orientation and decision-making of the enterprise.

ii. Classification by business

ITO mainly includes businesses as follows:

Software service outsourcing, including software development, software configuration and support, application implementation, application management and application hosting etc.

Hardware service outsourcing, including hardware configuration and support, hardware equipment hosting, and network integration etc.

IT consultation, IT-related consultant services.

IT training, including trainings on IT development, management and application technology.

For BPO, major businesses vary from levels as follows:

Strategic outsourcing, like strategic planning, process improvement, changing management, benchmarking management and restructuring of the business process etc.

Functional outsourcing, like design/R&D, human resource, finance and accounting, procurement, marketing/sales and customer service

Operational outsourcing, like call centre, market survey, data disposal (entry, analysis and storage), archives management, report generation, trade management (payment services, receipt management, support service, credit and debt collection, invoices and claim settlement), testing and cards management etc.