Chinasourcing--outsourcing to china: What's the Weak Point of China's Current IT Outsourcing?

BEIJING, May 2 /Xinhua-PRNewswire/ -- The information technology outsourcing (ITO) industry in China is still in a starting stage. But, it has already shown a strong growth momentum. Software outsourcing has been the most outstanding aspect. CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong, recently released the 2006-2007 Annual Report on China's Software Outsourcing Services Market, which shows that in 2006 China's software outsourcing market reached a size of $1.43 billion, up by 31.56% over $920 million in 2005.

China still lacks experiences in IT outsourcing when compared to other countries. There is a need in research efforts in summarizing IT outsourcing theories and models that suit enterprises and the actual situation in China. However, as Chinese enterprises further deepen their IT applications, there is no doubt that the IT outsourcing industry has a bright future. Some have predicted that China will be among the world's top 3 countries in terms of IT outsourcing businesses between 2007 and 2010. It is already 2007 now. Has China really been among the World's top 3 countries in terms of ITO? What problems still need to be urgently solved on the road towards the goal? CCID Consulting will make the following analysis:

Direction of development remains unclear

Currently, many experts and scholars are talking about which model China should follow to develop ITO. CCID Consulting argues that any development road, be it the India model or other models, needs to depend on the actuation of a country. There is no contradiction between inherent experiences and innovations. China should decide the road that it is to take based on its national conditions. ITO is still in a starting stage in China. It is not mature yet. The country must start with ''doing processing work'' for others and can only become independent and then gradually establish its own brand after reaching a certain scale of and experiences in technology, personnel and management. Before establishing its independent brand, China must be the ''processing'' for others. Through outsourcing, enterprises can grow and become stronger in a short period of time, improve their international competitiveness and form their own brands faster.

Shortage in talent reserves

In pace with the fast growth of ITO, there is also a growing talent demand from enterprises. However, this is such a situation: On one hand, there are large numbers of university graduates who cannot find jobs each year. On the other hand, enterprises cannot find suitable persons to fill in their position vacancies. Some enterprises even say that if there is sufficient human resources support, there will be no problems for us to get orders. What is the reason behind this? Firstly, there is more examination-oriented education rather than qualification education in China. One-sided pursuit of enrollment quotas has made our students lack a spirit of innovations. Secondly, theory is separated from practice. We are too conventional in setting up university majors and lack a link with practice . The students which we train are sole bookworms and cannot quickly adapt to the work needs. In addition, students also have problems in their employment mentality. While there is anything wrong for students to look for enterprises with strength when they seek employment, many students have grandiose aims but puny abilities. Enterprises have to pay a very high training cost even if they want to recruit such students. This will increase corporate burdens. Finally, there is shortage of compound talents. Compare with people with monolithic skills, compound talents can save manpower cost for enterprises and more suit the requirements of work posts. This can shorten the talent training cycle and give full play to the strength of talents. This is why enterprises generally scramble for compound talents and practical talents. But at present, there are relatively few compound talents. This has made it entirely impossible for enterprises to build up their human resources reserves.

Lack of industry organizations that represent enterprises

When talking about technology outsourcing, many people are willing to compare China with India. Other aspects aside, India does have advantages in industry organization which China cannot rival. In India, there is an industry association called NASSCOM. This is a non-profit association registered in the form of company. It is no exaggeration to say that India's outsourcing success is attributable to this organization to a certain extent. It functions like the market department of a company. What is different is that it is the international ''market department'' of India's outsourcing industry. When a US company needs business outsourcing, its first reaction is to turn to India, because NASSCOM has done its work to the best. For China to be among the world's top 3 countries for technology outsourcing, it is very important to set up a non-profit organization that can represent the industry to take part in international competitions.

Lack of experiences in large-scale team management

In China, a development team of over 100 persons will be considered a very big team. For India, big teams are often defined for 1,000 or even several thousand persons. Technology outsourcing enterprises in China need to find projects and solve the problem of personnel management. How to distribute a large project level by level and how to achieve seamless connection between employees and project teams and minimize management cost are the problems that a technology outsourcing company needs to solve.

Lack of ability to provide solutions to big international enterprises

Through surveys, experts at CCID Consulting think that no relationship of frontal conflict has been formed between China and India in technology outsourcing. It can be seen from the projects, which China has undertaken, our services are still at the rather low end of the industry, such as software development and testing. China has almost not involved in high-end services such as solution provision. This is mainly because the country does not possess too big strength in the fields ranging from consulting to design.

To sum up, there is still a long way for China to go to be among the world's top 3 countries in terms of IT outsourcing services between 2007 and 2010. There are also many problems for China to solve. But, there is one aspect which is certain: China must clearly understand its strengths and characteristics, find a road which suits its national situation and take it in a down-to-earth and persistent way. It is not just the responsibility for some enterprises to gain a place for China in the international technology outsourcing market. But, enterprises alone are not enough. The government should also offer corresponding manpower, materials and policy support.

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 a direct affiliate of the 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 and 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 is establishing international cooperation links across the United States, the Asia-Pacific region and Europe, by setting up agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.

Based on four major competitive areas of the powerful data channels, industrial resources, intense knowledge and deep understanding 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 is committed to becoming the No. 1 brand for strategy consulting, the No. 1 consultant for enterprise management and the No. 1 expert in market research. For more information, please visit our website at http://en.ccidconsulting.com/ .

For more information, please contact: Grace Gao CCID Consulting Co., Ltd. Tel: +86-10-8855-9020 Email: gaojie@ccidconsulting.com