When China opened itself up to the world twenty years ago, many realized how its huge market of almost 1.3 billion consumers could impact the biggest manufacturers and retailers in the world. Few anticipated however, that China's large population base would also provide competitive advantages against the most dominant players in the outsourcing industry. China's current outsourcing market is growing an estimated 30 percent annually, and many countries have relocated their headquarters to China to establish businesses.
China and India are key players among the global sourcing industry. While it remains unlikely that it will overtake India's proven dominance completely, China is on track to usurp a significant segment of India’s outsourcing revenue in the future.
China has five major cities that provide the bulk of its sourcing services: Beijing; Chengdu; Shanghai, popularly known for providing product development, research and testing, and business analytics; Shenzhen, specializing in software, application maintenance and development; and Guangzhou, known for its engineering services. Its software outsourcing park is located in Dalian, with around 400 businesses that are expected to increase sales to 20 billion Yuan annually. Dalian is often compared with Bangalore in India. Presently, it is a part of the country’s eleven "National Software Industry Bases" and "National Software Export Bases."
China’s primary specializations include manufacturing, finance, services, health care, and government/education. China is mostly involved in the KPO, ITO, and BPO sectors, with investors like Convergys, Accenture, IBM, HP, and AT&T establishing their niches in different locations. There are also local providers that have become global players in the industry, such as Neusoft, Dextrys, Bleum, and Agumentum.
The recession has boosted China’s service industry, including its sourcing market. The Chinese government has made significant policy changes to extend this advantage, such as offering businesses financial support, subsidies, tax breaks, and intellectual property protection rights in twenty pilot cities; Hangzhou, Suzhou, Xian, Shanghai, and Beijing being among them.