Posts Tagged ‘China’

India, China still the top out sourcing destinations

March 31st, 2014

India is the clear global leader by revenue, while China is the most serious challenger by scale, according to a study of nine Asia-Pacific (APAC) countries as potential offshore service locations.Outsourcing30

Bangladesh, Indonesia and Vietnam are continuing to gain regional traction for offshore service delivery, while more mature countries, such as Malaysia and the Philippines, are refocusing on their core capabilities. The capabilities are higher-end IT infrastructure, help desk, application and business process services, the study by Gartner said.

Historically, cost attractiveness, quality of service and scalability were key drivers for using Asia as an offshore outsourcing destination. However, in the last few years, growing concern about high inflation, attrition and quality lapses in offshore and nearshore locations have been driving chief information officers to consider alternatives such as low-cost onshore sourcing and sometimes crowd-sourcing.

Despite these trends, India and China are still among the most popular destinations for offshore services. Over 48 per cent and 45 per cent of clients surveyed in 2012 were using these countries for nearshore or offshore outsourcing respectively.

Countries in APAC offer cost-competitive, typically stable and scalable locations for offshore IT and business process services, but Latin American and Eastern European countries now compete more aggressively for offshore deals, it said.

The currency fluctuations and rising delivery costs are also an issue for Asia, it added.


Hefei Tops China in Service Outsourcing Growth

January 14th, 2014

Hefei has been announced the first place on the service outsourcing city list for its industrial growth in the recent “Investment Attractiveness Assessment on Chinese Service Outsourcing Cities 2013″.outsourcing50

It is introduced that “Investment Attractiveness Assessment on Chinese Service Outsourcing Cities” is the first professional evaluation program on all domestic service outsourcing cities competing in service outsourcing industry. This recent assessment was the third session nationwide, with a participation of 113 cities.

In recent years, Hefei has made great efforts to promote its demonstration city image in service outsourcing, resulting in rapid progress in this field. Currently, several key and featured outsourcing sectors in financial back-office service, animation online game and E-commerce have taken shape. The total contract amount for service outsourcing signed in 2013 broke the ceiling of 1 billion dollars and the amount of money involved in execution surpassed 700 million dollars. With the expansion of the industry in scale, the business of service outsourcing has elbowed into 41 countries and regions in the world.


China Specifies VAT Exemption for Offshore Outsourcing Services

December 26th, 2013

In the recent “Notice Regarding the Inclusion of Railway Transportation and Postal Service Industries under ‘Value-Added Tax (VAT) in lieu of Business Tax’ Pilot Reform (Caishui [2013] No. 106, hereinafter referred to as ‘Circular 106′)” jointly released by the Ministry of Finance (MoF) and the State Administration of Taxation (SAT), it specified that offshore outsourcing services in China will be VAT exempted from January 1, 2014, to December 31, 2018, as a pilot transitional policy during ongoing VAT reform.Outsourcing23

Under Circular 106 offshore outsourcing services refer to ITO (Information Technology Outsourcing), BPO (Business Process Outsourcing) and KPO (Knowledge Process Outsourcing) services provided by a pilot taxpayer of the VAT reform to a foreign company under an entrustment contract.

The “Circular on the Tax Collection Policies for the Nationwide Adoption of the Business Tax to Value-Added Tax Pilot Conversion in the Transportation Industry and Certain Modern Service Industries (caishui [2013] No. 37, hereinafter referred to as ‘Circular 37′)” came into effective on August 1 this year and is the current major guideline for enforcing the VAT reform. Circular 37 allowed VAT exemption for offshore outsourcing services provided by companies located in certain cities of China and is scheduled to expire at the end of this year. Circular 106 expands this exemption to all pilot taxpayers and provides the detailed scope of eligible services. It will be effective starting next year and will abolish the provisions of Circular 37.

Greater detail of the eligible services for VAT exemption can be found below:


1) Software research, development and outsourcing:

a) Software research and development services

  • The development of customized software, embedded software, packaged software, system software, and software testing services provided to departments and enterprises of/in finance, government, education, manufacturing, retail, services, energy, logistics, transport, media, telecommunication, public utilities and medical and public health for the operation, production, supply chain management, customer relationship management, human resource and financial management, auxiliary design in computers, engineering, and other activities of clients.

b) Technical software services

  • Technical services such as software consulting, maintenance, training and testing.

2) Outsourcing of research and development services in information technology:

a) Design of integrated circuits and electronic circuits

  • The design and provision of relevant technical support services for integrated circuit and electronic circuit products.

b) Platform testing

  • Platform testing for the development and application of software, integrated circuits and electronic circuits.

3) Outsourcing of the operation and maintenance of information systems:

a) Operation and maintenance services of information systems

  • Internal information system integration, network management, desktop management and maintenance services for clients.
  • Information system application services such as information engineering, geographic information system and remote maintenance.

b) Fundamental information technology services

  • Fundamental information technology services such as integration of management platforms for fundamental information technology, IT infrastructure management, data centers, hosting centers, security services and communication services.


1) Process-design services for enterprises:

  • Process design for enterprises in internal management and business operation.

2) Internal management services for enterprises:

  • Services in backstage management, human resource management, financial, audit and tax management, financial payment, data analysis of medical and other internal management operation, data mining, data management, data usage, and special data processing, analysis and integration.

3) Enterprise operation services:

  • Services in technology research and development, and client analysis and database management for enterprise operations, sales, after-sale service of products, mainly including financial operations, government affairs and educational operations, manufacturing operations, life sciences, retail and wholesale, and transportation operations, public health operations, communication and public utilities operations, call center operations and E-commerce platforms.

4) Enterprise supply chain management services:

  • Overall solution design and database services for client’s procurement and logistics needs.


  • Research services on intellectual property rights, the research, development, and testing of pharmaceutical and biological technology, the research and development of product technology, industrial design, analytics and data mining, design and development of animation and online games, the research and development of educational courseware, and engineering design.


Neusoft Continued Top Ranking in China Outsourcing

August 15th, 2013

Neusoft Corporation (“Neusoft”, SSE: 600718), a leading IT solution and service provider in China, recently announced that Neusoft has been consecutively included for the eighth time and ranked as No. 1 among China-Based Top Providers ranking in “China-Based Offshore Software Development 2013-2017 Forecast and Analysis” report by International Data Corporation (IDC). Facing various challenges in the industry during the past year, Neusoft continued to maintain its leading position among China’s software outsourcing service providers for its clear-defined and effective development strategy, leading market shares and steady growth.


According to the report by IDC, in the context of the acceleration of economic recovery and the increasing maturity of the offshore model, China’s offshore outsourcing service sectors developed at a steady pace in 2012. China-based outsourcing market also experienced a dynamic merger of equals, buyouts of core business units, and establishment of joint ventures. Meanwhile, China’s service providers are gradually leveraging emerging technologies like cloud computing, big data, mobile Internet, and social network to climb up the value chain, helping clients reduce their costs, while simultaneously generating business value.

In 2012, with harsher competition and more dramatic changes in the global market, Neusoft has been sticking to the strategies of innovation, transformation and globalization, and actively transforming its business model to accelerate the growth driven by knowledge assets and innovation instead of increasing number of headcount. Neusoft has continuously strengthened cooperation with existing international customers and also expanded to high-end new customers. The company maintained steady growth over the past years due to the effective implementation of its overall globalization strategy, as well as the continuous innovation on talent, technology and business model.


7 PH cities named top outsourcing destinations

July 31st, 2013

Seven Philippine cities have been chosen as top outsourcing destinations in the world but Chinese cities are flexing their muscles for a bigger slice in the market.Outsourcing15

Tholons in its 2013 Top 100 Outsourcing Destinations report placed Manila as the third top global outsourcing place after India’s Bangalore and Mumbai while Cebu placed eighth. Five more cities were in the list with Davao, 70th; Sta. Rosa, 84th; Ilioilo, 93rd; Bacolod City, 94th and Baguio City, 99th.

Although the Philippines and India dominate the market, China is fast becoming a choice location. In the Top 100 Outsourcing Destinations report by Tholons, cities such as Shanghai, Beijing, Shenzhen, and Dalian ranked 11, 12, 14, and 15, respectively.

The  Information Technology and Business Process Association of the Philippines (IBPAP)  noted that China is improving the quality of education , investing in infrastructure and increasing the number of English-speakers in the talent pool.

IBPAP said even countries such as Sri Lanka and Nigeria are also making their bid as IT-BPM hubs.

World Bank data showed that Sri Lanka is rising in the ranks of middle-income countries, maintaining at least 5 percent growth even during three decades of conflict. The poverty rate improved from 15 percent in 2006-2007 to 9 percent in 2009-2010.

SLASSCOM, Sri Lanka’s IT-BPO Knowledge Services industry chamber, expects export revenue to increase by 182 percent—from $213 million in 2007 to approximately $600 million in 2013. The chamber reports that employment grew from 33,000 in 2007 to an estimated 67,000 employees in 2013. The number of companies is expected to reach over 220 in 2013 from 170 in 2007.

Nigeria is similarly keen on its showcasing its potential in Africa and the rest of the world. Even with economic gains, 62.6 percent or roughly 100 million Nigerians still live on less than $1 a day.

The Institute of Software Practitioners of Nigeria (ISPON) views software outsourcing as a strategy to address massive unemployment and “brain drain”. Nigerian overseas workers bring in US$20 billion into the economy, which the industry hopes can be reversed by strengthening the IT outsourcing industry. According to ISPON estimates, Nigeria can generate “over $100 billion if software outsourcing is fully tapped and harnessed.”

In Asia, the Philippines and India remain the top performers in the voice and non-voice sectors, respectively. IT-BPM is now the “highest impact” sector for India, accounting for 8 percent of gross domestic product (GDP), up to 25 percent of exports, and 52 percent of the global sourcing market. The industry is ranked fourth in India’s share of total foreign direct investment (FDI).

In the Philippines in 2012, the industry generated revenues of $13.2 million from voice and non-voice segments and employed 777,000 across the country. The industry road map targets overall revenue of US$25 million by 2016.

“Part of our role is to manage our industry’s potential so that it brings progress to everyone. Because talent is what makes our industry world-class, we are committed to developing our employees as professionals and as individuals,” said Jose Mari Mercado, president and chief executive officer of IBPAP. “Throughout IBPAP’s existence, we have focused on developing the country’s capabilities so that we can employ more Filipinos and enable them to build a bright future without leaving the country.”

Recognizing the industry’s employment-generation potential, the Philippine government has identified IT-BPM among sectors with a crucial role in poverty reduction and inclusive growth. IBPAP aims to train a talent base of 1.1 million over the next four years through industry public-private partnerships.


PHL BPO industry gears up as it faces threat from China

July 30th, 2013

Some 1.1 million Filipinos will be trained for business process outsourcing (BPO) work in the next for years as the industry gears up to sustain global leadership amid threat from other countries, most especially China.Outsourcing2

Jose Mari Mercado, president and chief executive officer of the Information Technology and Business Process Association of the Philippines (IBPAP), said the training would be done through industry public-private partnerships.

“Throughout IBPAP’s existence, we have focused on developing the country’s capabilities so that we can employ more Filipinos and enable them to build a bright future without leaving the country,” Mercado said in a statement Monday.

The industry generated revenues of $13.2 million from voice and non-voice segments and employed 777,000 across the country in 2012. It targets overall revenue of $25 billion by 2016.

In Asia, the Philippines, along with India, is a top performer in the voice and non-voice sectors, prompting the government to identify the information technology–business process management (IT-BPM) industry as among the industries with a crucial role in poverty reduction and inclusive growth.

Mercado said the industry has unleashed a wave of transformation across the globe, enabling several developing economies to emerge as viable, if not strong, contenders.

He said although the Philippines and India have dominant share of the market, China is also picking up steam.

In the Top 100 Outsourcing Destinations report by Tholons, a full-service strategic advisory firm for global outsourcing and research, Chinese cities such as Shanghai, Beijing, Shenzhen, and Dalian ranked 11, 12, 14, and 15, respectively.


IT outsourcing market still growing

July 22nd, 2013

THE IT outsourcing (ITO) market in the emerging Asia-Pacific markets as well greater China will grow at 13 per cent this year and the next year as companies adopt and incorporate IT digitisation and mobility, among other things, according to latest research by Gartner.

Freddie Ng, senior research analyst at Gartner, told BizIT that enterprise in this region are continuing to adopt and incorporate IT digitisation into their business as early technology users and this is helping to drive outsourcing growth.Outsourcing18

“Need for agility (and not just cost) is another key reason many organisations are adopting cloud computing. Instead of building out new IT infrastructure capacity and depreciating it over 30 years, forward thinking CIOs (chief information officers) are actively looking for workloads they might be able to move off their data centre floors through other means – such as co-location, hosting or cloud computing,” he added.

Another factor that’s also driving ITO in the region is the rapid adoption of mobility. Mobile device management services are also key market drivers because of increased enterprise adoption of mobile devices, including smartphones, tablets and other handheld devices, Mr Ng noted.


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