CCID Report Shows China's IT Services Market to Escalate in 2007

BEIJING, March, 21 /Xinhua-PRNewswire/ -- CCID Consulting Co., Ltd
(hereinafter known as CCID Consulting), China's leading research,
consulting and IT outsourcing service provider, the first Chinese
consulting firm listed in Hong Kong, reviews the current status of China's
IT Services Market in 2006-2007, and outlines the main market development
trends: China's IT services market began to enter a stage of structural
adjustment from 2006.
CCID Consulting's data show that the growth rate of China's IT services
market slowed down compared to that of 2005, even though it has increased
17.8% over 2005 and has reached a size of 59.5 billion Yuan in 2006.
According to statistics, lower growth in system integration services was
the key factor that pulled down the growth of the whole IT services market,
as system integration at present accounts for nearly 30 percent of China's
overall IT services market. Slowing down of integration growth signaled a
major change in China's IT services market, indicating that the information
society had gradually leapt from the procurement and use of basic systems
to software and service applications, as China's IT services market began
to enter a stage of structural adjustment since 2006. Jian Cang, an analyst
of CCID Consulting, indicates the structural adjustment trends as follows:
1. System Integration Growth Slowed down with Gradual Increase in
Outsourcing Activities
In terms of specific sectors, the IT consulting market benefited from
various IT consulting projects of the telecommunication industry and the
government and marked an increase of more than 20% over last year. For
system integration services, some companies saw a negative growth over last
year. However, under the effect of the Beijing 2008 Olympics project, the
system integration market managed to maintain a momentum of high-speed
growth and snapped the biggest share of the IT services market. With the
growing popularity of human resources outsourcing, the operational
procedure outsourcing market became the sector that grew fastest. The IT
system outsourcing market also grew rapidly. At the same time, the fast
growing sectors led to an over-20% growth rate of the IT technical services
market, while the support and maintenance market continued to grow
steadily.
2. Government Services Skyrocketed, Small Enterprise Market to be
Nurtured and Market Structure Remained Stable
With the implementation of government projects, in some provinces and
cities, IT services market for the government grew at the highest rate in
the vertical markets. IT services market for large enterprises maintained a
relatively high growth rate over last year and will remain the biggest
sector of the vertical markets. By comparison, the services market for
small enterprises grew relatively slowly and remained in the nurturing
stage. In the parallel markets, projects such as 3G construction, customer
support system, network management and security management in the
telecommunication industry contributed to relatively rapid growth of IT
services and the scope of this sector remained in the second place of
industry markets. The IT services market in the finance industry kept a
steady growth momentum over last year and was expected to continue to hold
the largest share of the industry. IT services in the manufacturing
industry grew most quickly thanks to the high demands of multinational
manufacturing enterprises. Although services in the energy and circulation
industries grew relatively slowly compared with other key industries, they
marked a growth rate of around 15%, which indicated the robust growing
demands for IT services in key industries.
3. Big International Companies Enjoyed Distinctive Advantages in
Comprehensive Services, Domestic Companies Such as Digital China and
Neusoft Kept their own Sphere of Industries
Among IT services providers, while IBM held the largest market share
with its capacity of comprehensive IT services, other major providers like
HP, Digital China, and Accenture continued their leadership position in
their strongest areas. AsiaInfo achieved a larger market share, due to the
fact that it purchased part of the telecommunication services of two
companies and received a large number of orders from the telecommunication
industry in 2006. Neusoft also had bigger market shares because of the
rapid growth of its outsourcing services.
The structural adjustment in 2006 will continue in 2007 and the next
few years. The trends in different sectors are as follows:
4. Ever-Greater Reliance of System Integration Projects on Consultation
Promoted High Growth of IT Consultation
As customers' interests diversified and demands rapidly shifting, and
as more attention is paid to their self-services and IT systems, system
integration will tend to reply more and more on IT consultation. Meanwhile,
greater awareness of the strategic importance of IT outsourcing enhances
the position of IT consultation as more and more enterprises value these
services. Consequently, IT consulting will continue to grow relatively
rapidly in 2007.
5. Training and Education Market Tend to Involve Less Fields, but
Demands Remain High and the Market Will Continue to Grow Steadily
The IT training and education market development has neither heated nor
slowed in the last two years, but this was not a problem of demands. As a
matter of fact, the rise of the IT training and education in China was
subsequent to the fact that post-secondary IT education was not in line
with the market. With the relative lagging behind of post-secondary IT
education some years ago, there will not be a great many new employees and
even students still in school enrolled in off-campus training. While
vocational schools, software schools and other post-secondary educational
institutions that even more highly target IT education were heavily
launched in the past two years, and IT companies also directly collaborated
with institutions of higher learning in IT education. Both were blows to
the off-campus training market. However, due to immense demands and the
inherent feature of information technologies to keep learning, IT education
and training still shows growing potential in vocational training. It is
forecast that the IT education and training market will maintain a growth
of around 20% in 2007 and demand will increase in training game and
software outsourcing experts.
6. Multiple Factors Promoted Outsourcing, Offshore Services Grew Fast,
Domestic Demand will Take More Time Before Explosion and Expert Supply Will
Also Restrict Market Development
Outsourcing was a highlight of China's IT services market in 2006. The
government-sponsored BPO basis was launched, and as a result, the market
responded positively and services providers were gathering. It seems that
everything was ready. However, the biggest difference between the resources
needed by manufacturing bases and plants and IT outsourcing is that the
latter require much more highly qualified personnel than the previous. How
to locate qualified personnel in a relatively short time is the most
essential bottleneck of IT outsourcing development in China right now. This
problem is expected to become even more pronounced in 2007, therefore the
growth of outsourcing is not very likely to explode, but steady and rapid
growth of over 25% is foreseen.
7. Customer Support and Maintenance Will Continue to Lean Towards
Software
The focus of customer support and maintenance leaned more and more
towards software since 2006. Hardware services declined by 2.4 percentage
point in the overall support and maintenance services in 2006 over 2005,
and the trend that will proceed and may even further in 2007. Software
intellectual property rights protection procedure will also considerably
affect the development of maintenance services. As a result, the growth of
this sector will be fast but restricted.
8. Small and Medium-Sized Businesses (SMB) Will Become the Main Clients
of Future IT Services
SMBs demand just as many IT services as large enterprises, but their
structure and features of demands resulted in a relatively low level for IT
services in the past ten-odd years. This situation will greatly change in
the next few years. First, IT services providers will have to transfer the
focus of growth to SMBs and actively explore the opportunities of serving
them, because large enterprises become more cautious of spending, the
competitive pattern among large companies already tend to become stable,
and revenue growth with them slows down. Second, the diverse service modes,
open-source software development, and the promotion of standard services
and service products will expand the profit potential of serving SMBs and
services providers will consequently invest more in services targeted at
SMBs. Last but not least, lower costs and better understanding of SMBs of
the relation between their competitiveness and the IT system will make them
more willing than before to invest in IT and increase demands for IT
services. So for a number of years in the future SMBs will demand rapidly
increasing IT services, and fighting to win over SMBs will gradually become
the focus of competition among IT services providers.
About CCID Consulting
CCID Consulting Co., Ltd (also known as CCID Consulting), the first
Chinese consulting firm listed in the Growth Enterprise Market of the Stock
Exchange (GEM) of Hong Kong (stock code: HK08235), is directly affiliate to
China Center for Information Industry Development (hereinafter known as
CCID Group). Headquartered in Beijing, CCID Consulting has so far set up
branch offices in Shanghai, Guangzhou, Shenzhen, Harbin, with over 300
professional consultants and industry experts. The company's business scope
has covered over 200 large and medium-sized cities in China. Apart from
home market development, CCID Consulting establishes international
cooperation links across the United States, Asia-pacific area and Europe,
by setting up agents in the U.S, Japan, South Korea, Australia, Singapore,
Italy and Russia, along with the aim to be global.
Based on four major competitiveness of the powerful data channels,
industrial resources, intensive knowledge and deep understandings of
information technology, CCID Consulting provides customers with consulting,
research and IT outsourcing services covering strategy planning, IT
application, marketing strategy, human resources and information technology
outsourcing. Our customers range from industrial users in IT,
telecommunications, energy, finance, automobile to government departments
at all levels and diversified industrial parks. CCID Consulting commits
ourselves to become the No.1 brand for strategy consulting, the No.1
consultant for enterprise management and the No.1 expert for market
research.