China's software outsourcing industry is approaching in Winter

There are 3000 software service outsourcing Enterprises in China. In the next five years, 30 enterprises may be involved.

Although the financial crisis has a huge impact, it cannot be said that China's software outsourcing industry has declined ever since. Since Chinese companies use three or even four-handed transfer orders, and most of them are in the middle and low end, the impact will be relatively small.

"After two or three years of impetuousness, we have returned to the fundamentals ." Affected by the crisis in the U.S. financial industry, China's software outsourcing industry's original VC support-rapid expansion-IPO success model has been hard to sustain.

"It is out of date now ." Wang Bin, CEO of BoYan technology, told the first financial daily that the software outsourcing industry's initial growth has become a thing of the past. Now enterprises must calm down to return to the fundamentals, adjust financing strategies, re-plan strategies, strengthen internal operation efficiency and management, and pay close attention to positive cash flows.

Sun Zhenyao, Chairman of haihui software group, predicts that there are now 3000 software service outsourcing Enterprises in China. In the next five years, there may be 30 enterprises. The prelude to industry integration has already begun.

Crisis time

The recent financial crisis has profoundly affected the domestic software outsourcing industry.

In fact, since last year, due to the appreciation of the renminbi and the new Labor Law, the cost of Chinese software outsourcing enterprises has risen and the profits have fallen, while the US financial crisis has pushed back.

A person from Dalian jianbait told this reporter that if the RMB appreciation reaches 6.4, the profits in China's service outsourcing market will be almost lost. Although the appreciation of the renminbi has slowed down, it is not optimistic whether Chinese enterprises can raise the price.

Sun Yanshu, CEO of inspur group, told the first financial daily that inspur made $30 million in the software outsourcing field last year, and the appreciation of RMB has a huge impact on enterprises. "Among the customers of inspur, only Microsoft agreed to the price increase requirements of inspur, but it is difficult for other customers to raise the price ."

According to industry insiders, there are few project orders of tens of millions or even hundreds of millions of dollars on Wall Street. At present, it is widely estimated that the financial industry crisis will have a very large impact on the mid-to-high-end, low-end and Middle-end may be slightly smaller, but it is also not optimistic.

Microsoft is currently one of the largest European and American companies sending packages to China. orders sent to China last year amounted to $0.1 billion. However, Zhang yaqin, senior vice president of Microsoft worldwide, reminded CEOs of domestic and foreign enterprises not to be too optimistic, it is necessary to adjust the company's product structure, cut off the business that cannot bring cash flow in the short term, strengthen management and operation efficiency, and prepare for the arrival of winter.

IPO burst

Sun Xiaoshu said that after the rapid development of China's software outsourcing industry in the past few years, the original ecological model has undergone great changes. It is understood that the original software outsourcing industry in China is mainly dependent on the rapid expansion of VC support, and then the IPO model. Due to financing channel problems, this growth mode is no longer available.

In the past one or two years, several software outsourcing companies in China have proposed a listing plan, some of which are already eligible for listing, but there are also a large number of bubbles in the industry.

Wang Bin believes that in the past two or three years, domestic software outsourcing enterprises have almost experienced explosive growth. "In the past, 30% of customers may be in the bubble. I felt sorry for the fact that it would not increase by 80% every year ." Wang Bin Said that many customers from domestic and foreign contractors had to talk about it. The other party had not thought about whether to do it or not, so they had to get it. Outsourcing companies also needed to educate customers, greatly increasing service costs, there is no profit at all.

"Our sales staff also took a list of $0.2 million in the past, but in the end, the sales cost accounted for 25%, basically impossible to make a profit ." Wang Bin said that in the past, due to the support of VC, as long as the domestic counterparts can be increased and the cost is not counted, he did not dare to do it now.

Liu Erhai, managing director of Lenovo investment, said that, due to the impact of the crisis, it is almost impossible to think about an IPO in the first half of next year, and the financing price is already very high. VC is more willing to look at it and decide again.

Start from scratch

Although the financial crisis has a huge impact, it cannot be said that China's software outsourcing industry has declined ever since. Since Chinese companies use three or even four-handed transfer orders, and most of them are in the middle and low end, the impact will be relatively small.

"Enterprise opportunities are still there ." Liu Tiao, president of softlink power, told this reporter that the biggest impact may be India. because of their large scale, they generally require orders of hundreds of millions of US dollars, while Chinese companies can make orders of millions of US dollars, therefore, Chinese enterprises are more flexible than their counterparts in India.

Although this is a positive aspect, in turn, it is because Chinese enterprises are not capable enough to receive enough orders. Therefore, after the crisis comes, Chinese software outsourcing enterprises should review themselves, change the way you do things.

Wang Bin predicted that after the market adjustment, enterprises were also adjusting, and some of them had withdrawn and some were merged and acquired.

Sun Xiaoshu said that enterprises like inspur who already have a platform for mergers and acquisitions will have great advantages in the future. M & A has been mentioned in the inspur strategy.

 

Source: first financial daily