China Rising in Importance in Global Outsourcing
A new paper from KPMG takes a look at China’s rising importance in global outsourcing. Suppliers have progressed to specialize in niche areas such as:
- Legal process outsourcing
- Animation and gaming
- E-learning
- Offshore engineering
- Pharmaceutical R&D
While many companies are showing greater appetite for outsourcing diversification, they still want the reassurance of dealing with companies with global perspective and experience, the paper says. This is where the Chinese government’s 1000–100–10 plan comes into play:
Launched in 2006 with funding in excess of US$1bn, the plan aimed to establish 10 Chinese cities as global outsourcing bases (subsequently increased to 20 cities in January 2009), to attract 100 international corporates to outsource to these locations and to develop 1000 Chinese outsourcing vendors to service this new client base. It was a breathtakingly ambitious plan but the results can be seen with Dalian, Shanghai and Beijing already ranked in the top 10 most attractive cities for outsourcing1 .
It is reckoned that Shanghai could even challenge Bangalore for the top spot within two years, with Dalian and Beijing thought likely to make it into the top five.
While the potential benefits of China as an outsourcing center are many — technical skills, language skills, depth of talent and pricing to name but a few — it is the increasing professionalism of the fledgling, 15 year old industry which is impressing many, the paper concludes. For example, many businesses now offer thorough, months-long training programs in technical skills and customer service, sometimes stationing workers overseas for extended periods at customer locations to become more familiar with the client’s business operations.
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