Rising domestic demand, changing business models and continued government support is expected to fuel the development of China’s Shared Services and Outsourcing (SSO) industry, according to a new report by KPMG China.
The report, titled “Inside the Dragon 2013: Outsourcing Destinations in China” highlights that organisations increasingly view outsourcing as a critical component of their operating models.
China – both as a market and a base for emerging service providers – is seen as offering good opportunities to meet that demand by delivering business and IT services across both local and global markets.
At the end of 2012, China’s SSO industry stood at USD46.5 billion; this is expected to double to USD85 billion in 2015, the report notes, attributing this to the availability of talent, the quality of infrastructure and ongoing government commitment.
Egidio Zarrella, Partner, Clients and Innovation Consulting, KPMG China says: “China continues to aggressively position itself as a top SSO destination and is making an effort to industrialize this sector. This has created a strong, domestically focused industry as well as an increasingly viable global and regional hub.”
The report highlights the number of key SSO locations in China has increased to 29, up from 21 in 2010.
Kai Cui, Partner, China Leader, Shared Services & Outsourcing Advisory, adds: “With sustained favourable economic conditions in Asia, particularly in China, organisations are being far more strategic when matching their different strategic objectives to relevant locations. In China, the SSO cities have evolved and many of the locations are now well known for specific areas of expertise. For example, Dalian in Northern China capitalises on its established software enterprises to focus on IT services as well as its supply of Japanese and Korean speaking professionals. Guangzhou and Shenzhen in Southern China are exploiting their geographical proximity to Hong Kong and Southeast Asia by developing strong manufacturing and processing industries.”
“In addition, China’s plans to invest RMB 154 billion (USD25.2 billion) in cloud infrastructure over the next five years will also be a game changer. Five cloud cities have already been set up and another 20 are in the pipeline. This expanded communication capacity is expected to stimulate further growth in terms of both supply and demand for China’s SSO industry,” Zarrella concludes.
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