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Going up the value chain

May 10th, 2010

The maturity of the Indian business process outsourcing (BPO) sector has given birth to yet another wave in the global outsourcing arena—knowledge process outsourcing (KPO). An interesting competition is brewing between India and other countries such as Russia, Israel, South Africa, China and the Philippines.

Locations such as Bangalore, Chennai, Mumbai and Thiruvananthapuram are giving stiff competition to Moscow, Shanghai, Johannesburg and St. Petersburg for attracting niche KPO work.

Bangalore is jostling with Moscow and St. Petersburg for research and development; Chennai is competing with Gaunghzao, China for attracting engineering services; Mumbai is vying for financial analytics work with Singapore, Dublin and Toronto and Thiruvananthapuram is locked in a fierce competition with Shanghai and Beijing for attracting animation and game development work. Legal KPO work is dominated by Mumbai over Johannesburg, while Hyderabad is emerging as an attractive location for healthcare-related KPO work, a recent study by Tholons advisory firm points out.

KPO typically involves high-value work performed by highly skilled professionals who have specialised knowledge and skills. While the BPO industry efficiently handles a hugevolume of back-office processes, the KPO industry handles more of the high skilled work that requires analytics expertise and experience.

The type of KPO services that Indian firms are offering are investment research services, market research services, intellectual property and patent research services, legal research and legal process services, Web development services, clinical research, business research analytics, engineering services, data acquisition and supply management services.

Analysts reckon that India has proved its expertise in the low-end and voice-based BPO space over the past years. The move to attract high-end KPO work is the next progressive step. “Even though countries like the Philippines have taken the lead over

India in terms of English voice-based contact centres, India is going to stay on top with higher value service delivery capabilities and KPO work,” says Saugata Sengupta, senior analyst at Tholons. The $11.9 billion Indian KPO industry is expected to grow at a rate of 40% this year, compared to 10 to 15% last year, estimates Gartner.

In February, Unitedlex, an LPO entered into an agreement with BT (British telecom) to handle a part of its global in-house legal work, beginning with a team of 15 lawyers based mostly in India. Dan Reed, CEO at Unitedlex believes that it is a new trend in the legal segment when a third party provider has acquired a captive group set up by a corporate, here in India.

Another LPO Integreon signed a five-year contract with the Monitor Group recently. Last year, London-based Rio Tinto entered into a legal services outsourcing agreement with Gurgaon-based CPA Global that is projected to save Rio Tinto up to 20% annually in legal costs. Genpact, the country’s largest BPO informs that their analytics business is growing rapidly. Shantanu Ghosh, senior vice-president at Genpact says, “With analytics business, there is higher value added. You capture higher value and higher margins.”

Arun Kharbanda, business unit leader, research and analytics at WNS Global Services informs that in the last four to six months, newer clients want to do business with WNS Global in market research. Similarly, Rohit Kapoor, CEO, EXL Service reveals that in the last two quarters, the company’s analytics business has experienced a growth of 70 to 80%.

Clearly, India is going to stay on top with higher value service delivery capabilities in the times to come.

Source:http://www.financialexpress.com/news/going-up-the-value-chain/616287/0

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Top u.s. salesforce.com partner echo lane acquired by hisoft, China’s leading IT Outsourcing company

April 15th, 2010

Echo Lane, one of the top U.S. solution providers for Salesforce.com and other cloud applications, announced it has been acquired by hiSoft Technology International Limited, the leading global information technology outsourcing company headquartered in China. This is the most aggressive push yet into the U.S. cloud computing market for a major China-based IT Outsourcing company.

Under the terms of the agreement, Echo Lane will remain a wholly owned subsidiary of hiSoft, and the firms will join forces to expand their dominance in the cloud computing market, serving Global 2000 customers in the United States, Asia and Europe.

“Over the past eight years of working together, hiSoft has become AIG Edison Life’s essential business partner in the areas of application system development and business process outsourcing,” said Tohru Futami, Managing Director and CIO, AIG Edison Life Insurance Company. “We welcome hiSoft’s acquisition of Echo Lane, as we expect that it will bring great value and benefits to both hiSoft and AIG Edison Life. The combined companies will contribute greatly to our strategic cloud computing initiatives.”

Echo Lane was founded by Salesforce.com alumni in 2004 with an exclusive focus on cloud computing solutions. The firm has since earned a solid reputation executing strategic cloud-based initiatives for customers in the manufacturing, high-tech and financial services industries. In addition, Echo Lane provides a full set of business process and information technology consulting services around the software-as-a-service model. Two deep specialties are: the migration of custom, legacy, and traditional on-premise applications to cloud computing solutions, and the implementation of fully integrated, end-to-end CRM solutions using leading cloud computing applications including Salesforce.com, Big Machines, and Eloqua.

“The acquisition of Echo Lane is an important step in hiSoft’s strategy to strengthen our global cloud service capabilities, as well as our CRM consulting practice,” said Tiak Koon Loh, CEO of hiSoft. “As one of Salesforce.com’s elite partners, with more than 1,000 completed projects in the past six years, Echo Lane brings an impressive portfolio of cloud computing knowledge and experience. This, combined with hiSoft’s deep engineering expertise, extensive delivery capabilities in China, and broad CRM experience within enterprise customers in the financial services, technology, and manufacturing sectors, will allow us to provide our global customer base a whole new level of innovative and cost-effective cloud deployment services.”

With more than 4,500 employees across 16 global business offices and eight Asia delivery centers, hiSoft is a trusted outsourcing partner to its clients, leveraging a ‘flexshoring’ service delivery model via mostly China-based development centers. With an even mix of research and development services for those clients that build and sell technology products, and information technology services for those clients that leverage technology to run their companies, hiSoft is well known for both its engineering depth and industry breadth. hiSoft is a private company backed by Draper Fisher Jurvetson, ePlanet Ventures, GE Capital, Granite Global Ventures, Intel Capital, Mitsubishi UFJ Securities (HK) Capital Limited and Sumitomo Corporation.

“We are very excited to join forces with hiSoft, because together, we now have the flexibility to offer clients an extensive array of end-to-end cloud and other technology solutions delivered by either onshore or offshore teams, depending on the client needs and requirements,” said Alana Kaselitz, Principal of Echo Lane. “The power of our cultures working together will allow Echo Lane to leverage hiSoft’s reach, technology prowess and resources, and offer our hands-on-expertise to a wider global market.”

Source:http://www.marketwatch.com/story/top-us-salesforcecom-partner-echo-lane-acquired-by-hisoft-chinas-leading-it-outsourcing-company-2010-04-15?reflink=MW_news_stmp

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China-based GPS vendor UniStrong outsources PND production to Foxconn and Foxlink, say sources

April 7th, 2010

Beijing UniStrong Science & Technology, the largest vendor of GPS products in China, has begun outsourcing the production of its own-brand PND products to the Foxconn (Hon Hai) Group and Foxlink, according to industry sources. The China-based vendor previously sold Garmin’s PND products on sales agent commission basis.

With China’s basketball star Yao Ming as one of its major shareholders, share prices of UniStrong have soared over 165% to close at 98.3 yuan (US$14.401) on the Small and Medium Enterprise board of the Shenzhen Stock Exchange on April 6 compared to its IPO price of 37 yuan launched on April 2.

Given that only 4% of cars sold in the China market are equipped with in-car GPS devices, UniStrong has great potential for further development, commented the sources, indicating that sales of vehicles totaled 13 million units in China in 2009.

Source:http://www.digitimes.com/news/a20100407PD218.html

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Much scope for India-China joint projects: Krishna

April 7th, 2010

India and China have a ‘considerable scope’ for setting up joint ventures in infrastructure and Information and Techonolgy sectors, External Affairs Minister S.M. Krishna said here on Tuesday.

‘Considerable scope’ exists for joint projects between the two countries as India needs huge investments in infrastructure covering sectors like power, roads, rail and telecommunication, Krishna said.

Krishna arrives in Beijing for ‘comprehensive’ talks

On the Chinese side, the outsourcing of IT services by state enterprises has only started recently. There is a huge potential waiting to be tapped, which would happen only by connecting Chinese users to Indian providers, the minister said addressing at the China Institute of International Studies.

Krishna, who is here on a four-day visit till April 8, said that the two neighbours should show maturity in dealing with longstanding bilateral issues, and face global challenges together.

‘We have to accept that there will be outstanding issues between the two countries even as our relationship forges ahead. The true test of our maturity is how well we handle our problems,’ said Krishna.

‘As India and China manage their domestic priorities well, it has huge implications for global prosperity,’ Krishna said.

Facing challenges of urbanisation, resource consumption, food and energy security, China and India can exchange best practices to benefit each other, the minister said, adding that there is much that can be gained through close cooperation.

Krishna to take up India’s concerns with China

About ‘competitive relationship’ due to boundary disputes between New Delhi and Beijing, the minister said that it is up to the two countries to disprove such scenarios by ‘concrete examples of cooperation’.

A number of dialogues and forums already exist between India and China where both sides discuss bilateral, regional and global political issues, including boundary question, trade matters and water management.

‘Regular meetings lead to better communication, more understanding and confidence,’ said Krishna, encouraging an ‘intensive and sustained engagement’ between the two systems.

Source:http://sify.com/news/much-scope-for-india-china-joint-projects-krishna-news-international-kegxEeibhej.html

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Will India, China remain top spots for offshoring?

April 3rd, 2010

India was smart enough to recognize an opportunity to expand its IT outsourcing business during the late 1990s by selling its services to North American companies scrambling to prepare their systems for the Y2K crisis — which ended up being not much of a crisis after all, though that’s another story. Since then, it’s become the dominant destination for offshoring by offering a large labor pool that will work for wages far lower than salaries commanded in Western countries.

Lots of other companies have tried to position themselves as “the next India” by promoting their own lower-cost labor pools. One country that has made serious headway is China, the only country with a population larger than India’s. (China has about 1.3 billion residents, compared to India’s 1.1 billion. The U.S. population is about 309 million.)

Yet these large populations are beginning to look less appealing since only a small subset of them are skilled enough to perform the kinds of sophisticated tasks Western companies are interested in offshoring, contends a strategy+business article (registration required) written by Kevin Stringer, a visiting professor at Thunderbird School of Global Management and a lecturer at the Swiss Finance Institute. Stringer knows a little something about offshoring, as he previously helped UBS develop an offshoring strategy.

I don’t want to jump to conclusions, but one of the examples in the article involves “a global bank” that set up a wealth management analytics team in India to provide equity research for private banking clients. Though labor costs were far lower, bank executives found productivity wasn’t up to snuff: Although the Indian analysts were equal to or slightly better than their global colleagues in mathematical modeling, they were well below average in synthesizing the data, and in writing and producing the actual research and recommendations, which reduced the labor-cost savings.

According to the article, productivity of Indian and Chinese workers lags behind that not only of U.S. workers but of workers in offshore alternatives. According to the Organization for Economic Cooperation and Development, China’s GDP per hour worked is only about 8 percent of that of the United States, and India’s is 7 percent. By contrast, Estonia’s is 40.8 percent and Slovakia’s is 53.4 percent.

One of the sources the article cites is Diana Farrell, deputy director of the U.S. National Economic Council, who in the 2006 book “Offshoring: Understanding the Emerging Global Labor Market,” said just 10 percent of engineers in China and 25 percent of those in India possess the language skills, practical knowledge and/or appropriate cultural attitudes to work for multinational companies. For comparison’s sake, 50 percent of engineers in Poland or Hungary have the required skills.

Not only that, but large chunks of India’s and China’s population lack basic literacy. According to the article, India has the highest absolute number of people receiving very little education. Its literacy rate of 61 percent stacks up poorly with that of Singapore (92.5 percent), Taiwan (96.1 percent) and Estonia (99.8 percent), three countries mentioned as offshore alternatives for companies looking for skilled work forces that make more than their counterparts in India and China, but less than U.S. workers. The article also cites Indian government figures that put the percentage of India’s existing work force with basic vocational skills at 2 percent to 5 percent, compared with 96 percent in South Korea, 75 percent in Germany and 68 percent in the United States.

India is certainly aware of this, as I wrote last summer, citing the country’s efforts to beef up skills of residents living outside large metropolitan areas.

The article is well worth a read. It cites a long list of economic and environmental statistics to make the point that far more than in the U.S. and other Western countries, populations in India and China are starkly divided into haves and have-nots. Though it may sound crass to point it out, considering the larger societal ramifications, it’ll be hard to increase the number of knowledge workers in populations struggling to improve basic living conditions for so many of their people.

Gartner analyst Frances Karamouzis said last spring that other countries were beginning to take outsourcing market share away from India and China. Because of the maturity of its market, India is still best positioned to get large work forces up and running more quickly than other countries. Yet fewer outsourcing customers are seeking that kind of staffing power. But in a SearchCIO.com piece from August, Gartner portrayed India and China as strong candidates for offshoring.

It’s not my intent to be pro- or anti-India, but I do agree with Stringer’s conclusion that companies need to look beyond labor costs and seemingly ample pools of workers to conduct more sophisticated risk-reward assessments of offshoring opportunities. One alternative I hope more Western companies are at least considering is moving their outsourcing inititatives to a location in the rural U.S. instead of offshore, a trend IT Business Edge contributor Don Tennant wrote about last month.

Source:http://www.itbusinessedge.com/cm/blogs/all/will-india-china-remain-top-spots-for-offshoring/?cs=40469

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Asia-pacific BPO services…India and China remain undisputed leaders

March 25th, 2010

The 10 leading countries in Asia Pacific included the undisputed leader in offshore services India, with China remaining the greatest challenger in terms of potential scale.

India and China remain the undisputed leaders for offshore IT and business process outsourcing services in the Asia Pacific region, however, a number of countries are making considerable investments in this area and positioning themselves as credible alternatives, according to Gartner’s latest research.

For the report ‘10 Leading Locations for Offshore Services in Asia Pacific and Japan for 2010’, Gartner analysed the capabilities and potential of various countries as offshore services locations in the region. A separate report identifies the top 30 globally.

“Countries such as Malaysia, the Philippines and Vietnam have continued to strengthen their position against leading alternatives, while Indonesia has entered the top 10 for the first time,” said Jim Longwood, research vice president at Gartner. “Some of these countries have invested considerably and leveraged increased demand for lower-cost services. The global financial crisis forced many organisations to place a greater emphasis on cost optimisation.”

The 10 leading countries in Asia Pacific included the undisputed leader in offshore services India, with China remaining the greatest challenger in terms of potential scale. The other countries include a mix of mature environments that offer limited cost benefits (Australia, New Zealand and Singapore) and emerging countries with a variety of challenges, but attractive costs (Malaysia, Indonesia, the Philippines, Thailand and Vietnam).

During the last 12 months there has been significant activity in many countries to consolidate or grow their positions as leading locations for offshore services, according to Gartner. Although India continues to grow in terms of IT services being exported, its relative share of the overall worldwide total has declined as a result. India is also starting to face some challenges including wage inflation, local attrition rates, geopolitical issues and financial irregularities, which are opening opportunities for other countries that are also improving their capabilities to target local service demands of more-mature regional Asian clients.

“In view of India’s dominance, many countries trying to tap into this market are reassessing their strategy and looking at niche markets like call centres, logistics and other back-office functions where they might have a physical proximity advantage over mature countries like Australia, Hong Kong and Singapore,” said Mr Longwood.

Indonesia was a new entrant into the top 10 list this year due to its expanding business environment targeting both offshore IT and business services, its large labour pool and its well-established industry base in mining and manufacturing involving prominent multinational companies. Pakistan dropped off the top 10 list.

“This was largely due to Indonesia’s noticeable progress in addressing offshore opportunities rather than Pakistan’s drop in performance, but political instability was also an issue here,” said Mr Longwood.

The global financial crisis and US currency fluctuations still remain a challenge for offshore vendors and clients. While the Asia Pacific region is experiencing a lesser impact from the global financial crisis, varying currency exchange rates against the US dollar have affected the attractiveness of some countries in the region. Countries like Australia, whose currency rebounded strongly, should see an increase in domestic demand for offshore services and a marginal decrease in its attractiveness for niche services.

“As organisations increasingly look at global delivery as a means to reduce cost, they will need to focus on important areas such as security, data and IP protection and compliance,” said Mr Longwood. “However, the link between lower risk and higher cost holds true.”

The mature markets of Australia, Singapore and New Zealand offered limited cost savings, but led the ratings for language, political and economic environment, cultural compatibility, globalisation and legal maturity, data and intellectual property, security and privacy.

Whereas Vietnam was the only country to receive an excellent rating for cost; it received ratings of fair or poor on every other criterion, with data and intellectual property, security and privacy where it performed worst.

Countries such as Thailand, Vietnam, the Philippines and Indonesia all rated less favourably for political and economic environment. While low cost is an important factor, the political and economic environment remains a concern for many companies when moving business to offshore locations.

Infrastructure is the only area where most countries ranged from good to excellent, with Vietnam and Indonesia the only exceptions. Most locations were considered good to very good for language and cultural compatibility whilst China, Indonesia, Thailand and Vietnam weren’t rated as strongly.

In addition to the top 10, four other countries were also strongly considered: Pakistan, Sri Lanka, Bangladesh and North Korea. All of these countries have started to establish attractive environments for companies looking for low-cost countries or that have external service providers located in these countries that are beginning to sell services beyond the domestic market.

Source:http://www.indiainfoline.com/Markets/News/India-and-China-remain-undisputed-leaders-for-business-process-outsourcing-services-in-Asia-Pacific/4802313054

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Shenzhen becomes china’s largest IT service outsourcing bases

March 23rd, 2010

In recent years, IT services outsourcing industry has developed very quickly in Shenzhen, which has been listed as one of demonstration cities of the first batch of service outsourcing industry in China.

Under the background of world financial crisis, undertaking and implementing the service outsourcing business from overseas has quietly become the fastest industry in development and expanding. Authorities revealed to the reporter yesterday: at present, the offshore service outsourcing business that Shenzhen enterprises undertake has exceeded 5 billion U.S. dollars for the first time; the contract value has amounted to a record of 5.08 billion U.S. dollars, which ranks No.1 in the country. A number of domestic and foreign outsourcing service companies take Shenzhen as an international business base to accelerate the expansion of business and staff.

According to reports, in addition to the big enterprises such as Huawei, ZTE, and Tencent that rely heavily on the provision of “services” to develop rapidly and make money, there are a lot of other services outsourcing enterprises such as IBM, Evans, Da Zhan, Peng Kai, Freeborders, and CS&S are accelerating the expansion of business in Shenzhen.

In recent years, information services, especially software and service outsourcing, keep rapid growth in the context of globalization. There are forecasts that the current global “outsourcing” scale has surpassed 100 billion U.S. dollars. The development of software outsourcing has been regarded as the shortcuts of India, Ireland and China’s software industry development.

Source:http://www.szcpost.com/2010/03/shenzhen-becomes-china%E2%80%99s-largest-it-service-outsourcing-bases.html

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State Department indicates Google-China announcement coming Monday

March 23rd, 2010

A spokesman for the U.S. State Department says Google is likely to announce its decision shortly on whether to remain in China.

Spokesman P.J. Crowley told reporters Monday that “we aware that there are strong indications of an announcement by Google this afternoon.” Crowley said the government would not comment on Google’s decision until after it is announced.

Google Inc. had no comment Monday.

The Internet company said Jan. 12 it was considering shutting down its China-based search engine, Google.cn, unless the government lets the company operate the service without censorship.

On Monday afternoon, visitors to Google.cn were being redirected to Google’s Chinese-language service based in Hong Kong. The page said, according to a Google translation, “Welcome to Google Search in China’s new home.”

Source:http://blog.taragana.com/index.php/archive/state-department-indicates-google-china-announcement-coming-monday/

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CCID Consulting: China’s Electronics and Information Industry to Usher in a “Four-in-One” Regional Development Pattern in the Coming Five Years

March 18th, 2010

China’s leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), released its article on industrial planning and four-in-one for the Twelfth Five-Year plan period.

As this is the last year of China’s 11th Five-Year Plan, it is an ideal time to review the development of China’s electronics and information industry, and discuss the industry’s development strategies and regional industry development patterns for the coming five years.

The industry is experiencing high-speed growth in terms of scale and has reached a turning point in its development

The 11th Five-Year Plan, from 2006 to 2010, witnessed China’s electronics and information industry adoption of an innovation-oriented strategy, focused on transforming the growth model, advancing industry upgrades and enhancing China’s economic strength through the industry’s development. During the period, the industry continued to expand to reach a scale second only to the US. It also further optimized its industry structure, as well as improved its ability to innovate.

Meanwhile, a turning point emerged in the process of the industry’s development.

(1) The industry expanded at an average rate of over 35 percent from 2001 to 2006. However the rate was reduced to 23.6 percent, 17.9 percent and 12.5 percent, respectively, in 2006, 2007 and 2008.

(2) Investment was increasingly directed to upstream segments including electronic components, instead of the downstream segments including audio and video, computer and communications devices. In 2007, approximately 70 percent of the investment received by the industry was allocated to the component and material segments.

(3) Among the industry’s investors, the proportion of domestic companies was expanding. In 2007, the total investment by foreign-owned, foreign-funded and domestic companies, respectively, increased 7 percent, 21 percent and 38 percent year-on-year.

(4) The industry players were transforming from “introducing foreign businesses” to “going abroad”.

The transformation was in accordance with the requirements of the industry’s development. China’s electronics and information industry has long been powered by two forces: international industry transfers, which ensures rapidly expanding investment and capacity over a long period; and exports, which allow the US, Europe, Japan and South Korea to consume a significant part of China’s production. The strength of the two forces peaked after China entered WTO, building the industry into the world’s second largest. However, due to the recent global economic crisis, the existing industry development pattern experienced setbacks. First, China already holds 33 percent of the world’s electronics and information capacity, leaving limited room for further global industry transfer. Second, a drastic drop in overseas demand exerted a significant impact on China’s electronics and information industry, which adversely impacted the highly export-dependent development pattern. The extensive development pattern powered by investment, featuring processing trade and export-oriented economy, gave rise to several prominent problems: first, high dependence on foreign trade, which makes the industry vulnerable to external conditions; second, the lack of core strength, weak innovation capabilities and a low level of value-added production; third, increasingly severe resource shortages and environmental pollution.

Five-year outlook: to encourage domestic demand-driven growth

In the coming five years, it is critical that the industry alter the development pattern and encourage domestic demand-driven growth, which may involve attracting strategically important emerging industries, accelerating innovations and expanding the domestic market, with the aim of optimizing the industry structure, gaining core strength, improving the industry’s competitiveness to achieve sustainable growth.

Recently, China’s policy environment has also changed in a manner that will ease the transformation of the industry’s development pattern. On February 3, 2010, President Hu Jintao delivered a speech urging the country to transform the economic development pattern, continually advance economic development, enhance the Chinese economy’s international competitiveness and risk resistance capabilities, in order to ensure the high-quality development as well as expanding capabilities for further development. China’s central economic work conference in December 2009 also stressed that transformation of the development pattern will be a focus of China’s economic development in 2010. The Industry and Information Technology Minister Li Yizhong stated that the ministry’s work will center on “structure adjustment” and “pattern transformation” in 2010.

As for the local governments, during a period of economy and industry pattern transformation, they will have to take initiatives, closely follow the central government’s strategic guidelines, study the industry’s development rules and analyze the industry’s development trends to create a new “four-in-one” development pattern which combines initiative development, routine development, transposition development and oriented development.

Initiative development: to take the initiative in planning strategically important emerging industries

The global financial crisis has fundamentally changed the pattern of global economic development and consumption, as well as the climate for China’s economic and industry development. In face of the ongoing crisis, various countries are engaged in a new round of technology competition to bring creative innovations and industry-revitalizing methods to the world. For China, this presents both opportunities and challenges. During the post-crisis period, China is prepared to see international demand linger for a long time at a level far lower than that before the crisis due to changes in consumption patterns of developed countries. China will have no choice but to advance balanced sustainable development of its economy, adjusting for an innovation-powered and domestic demand-driven growth pattern. Regarding the new global economic reality, the central government decided to focus on developing strategically important emerging industries, as well as possessing core and key technologies in areas thought to be primed for breakthroughs. It is also in line with the state’s strategic goal of building an innovation-oriented country as depicted in the medium and long-term planning for science and technology development.

Premier Wen Jiabao, in a speech on how technology will facilitate China’s move toward a sustainable development model, stated that a strategically important emerging industry shall be able to produce products with stable market demand and bright market prospects, generate considerable profits as well as stimulate the development of other industries. He also named several key industries that are in line with the sustainable goal, including new energy, energy conservation and environment, new materials, life science, information networks as well as the utilization of space, ocean and deep earth. The electronics and information industry is of particular significance among the five strategically important emerging industries, with microelectronic and photoelectron materials and components, special-purpose electronic devices and materials, new generation mobile communications technology, next generation networks and basic software as key areas of future development. Meanwhile, the information technology based on microelectronics, photoelectron and software technologies is fundamental for other emerging industries including the new energy industry, the Internet of things and the new materials industry, while it is also closely related to life sciences and the technologies that support space, ocean and deep earth development.

Routine development: to revitalize the existing capacities and advance the convergence of informationization, industrialization and industry upgrade

The latest CPC report urged the country to develop a modern industry system through the convergence of informationization and industrialization, giving the convergence a high priority. The widespread application of information technology in various domestic economic areas may significantly improve efficiency, reduce resource consumption and production cost, as well as minimize environmental impact.

Currently, various local governments are combining the convergence of informationization and industrialization with leading local industrial areas. Guangzhou, Shanghai, Chongqing, Nanjing, Qingdao, the Zhu River Delta, Huhhot-Baotou-Erdos-Wuhai Zone, Tangshan and Caofeidian are the first batch of trial cities and regions. The trial has not only revitalized existing capacities, but has also created new capacities in emerging industries including automobile electronics, digital machine tool, and healthcare electronics. For instance, Guangzhou Municipality employed various measures to advance the convergence of the information industry and its traditional industries, which has led to industry upgrades and enhanced the local innovation capabilities.

Transposition development: to receive industries transferred from more developed areas

Globally, the electronics and information industry is currently going through a fourth key industry transfer. Taiwan, the Zhu River Delta, the Yangtze River Delta and the Bohai Region are transferring the medium and low-end sections to China’s central and western areas, and Southeast Asia and South America – a trend which began in recent years. China’s central and western areas, with its cost advantages, have been increasingly active in receiving the transfers from coastal and overseas electronics and information industries. However, these areas are confronted with competition from the Southeast Asia and South Africa. In the future, receiving the transferred industries will be an important approach for the central and western areas to achieve leapfrogging development.

Oriented development: to settle an appropriate orientation

In order to settle the industry policies for the coming five years, the local governments will either have to conduct investigations into the existing issues and determine what is blocking the industry’s development in the region, or to learn from the more developed countries and regions policies that will work to accelerate local industry development.

Specifically, local governments will settle several major projects, such as the marketing of strategic products, the research and development of key technologies, and major construction projects. The major projects will be reviewed and approved according to the demand of the region and necessary conditions, and will be adjusted and implemented in line with the state’s strategic needs and growth.

It is also advisable to establish major platforms to form a public service system supporting the industry’s continued development, which include a comprehensive information platform, a technology innovation service platform, and a public technology R&D and service platform. It will also necessitate the inclusion of an intelligent property and standardization platform, a training platform, a human resource service platform, and a financing service platform.

Source:http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100318005437&newsLang=en

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China’s healthcare sector to drive IT spend

March 10th, 2010

As China’s healthcare industry continues to modernize, the country’s IT expenditure in this sector is expected to rise from US$2 billion in 2009 to US$3.8 billion in 2012, according to a Springboard Research report.

Liu Jingwei, senior research analyst in Springboard Research’s Greater China office, said in a statement there is an increased focus by China’s hospitals to modernize its IT infrastructure and facilities. This drive to improve facilities can be attributed to the competitive healthcare vertical, which is “highly fragmented” by technology solutions as well as local and multinational companies, she added.

“[China's healthcare sector] is increasingly viewed as a hot industry by the world’s leading IT vendors, driving increased investment in product development, acquisitions, sales and marketing,” Liu noted.

One technology currently seeing rapid adoption is electronic medical records (EMR). This has led the Chinese government to step in to guide and regulate EMR development, at a national, rather than local, level. In fact, EMR is now top of most hospital CIOs’ wish list, ahead of other applications, the report stated.

The research also indicated that hospital networking needs will spur spending on network upgrades and adoption of wireless LAN (WLAN). Today, most Chinese hospitals are already equipped with 100 megabits per second (Mbps) of broadband speed, but Springboard said IT spend will be accelerated when these hospitals upgrade to 1 gigabit per second (Gbps) and increased WLAN capabilities.

However, the report also illustrated that the utilization of IT to effectively manage hospitals is still largely lacking in the country and healthcare IT spend is far behind the scale mandated by the Chinese government.

Also, most hospitals are staffed by a small IT department, and most of these professionals do not have medical backgrounds, contributing to their lack of industry knowledge, Springboard noted.

To overcome the lack of IT manpower and expertise, the report pointed out that hospitals have resorted to outsourcing, particularly in the areas of application development, hardware maintenance and Web site construction and maintenance.

“The importance of more professional IT services, such as consulting and system integration, is expected to gradually rise, as hospital IT infrastructure becomes increasingly complicated with more applications,” said Liu.

The analyst added that total outsourcing of hospital IT management “will be rare”, as security remains the top concern in making such decisions.

Source:http://www.zdnetasia.com/news/business/0,39044229,62061786,00.htm

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