China, Next IT Outsourcing Hub

March 3, 2011

The Chinese IT outsourcing market is projected to create $3.97 billion in 2011 and Australia is likely to be one of the big targets for Chinese IT outsourcing.

In October 2010, VanceInfo was unveiled in Melbourne and it is one of the biggest outsourcers for China. It is also expected to expand. The Sales and Market Director at VanceInfo, Trey Zagante was quoted as saying in an online news report that Australia is usually known for its shortage of skills. However, it’s spending in the IT arena is forecasted to increase. Moreover, most companies are in Australia are already familiar with the concept of outsourcing.

According to IDC analysts, the Chinese outsourcing market tagged at $2.76 billion in 2009. North American and European demand created about 50% of this. Rolf Jester, an analyst with Gartner referred to China as ‘India + 1’, giving the Chinese government credit for its growth and to obtain second place in the favorite outsourcing destinations in the Asia Pacific region.

Nonetheless, Australia remains to be a big Chinese outsourcing market, local Chinese clients would probably choose Chinese outsourcers in order to diversity.

Jester added that the Chinese companies are improving their marketing strategies. There is bound to more of these Chinese players in the market, he said. According to a report by Gartner on regional offshore destinations n 2010, China was ranked ‘good’ for its education, government support, cultural compatibility, infrastructure and economic conditions.

However, Gartner cautioned that China’s English skills, protection of data, legal and global maturity, privacy and intellectual property are not up to par with standards. China has superb laws and regulations, but implementing these laws and putting them into practice is essential, said Jester.

On the one hand, this is a cost efficient option with lower wages. And on the other hand you have to account for the development of strategy costs linked to security, IP and travel, reports


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