KPMG: China's outsourcing industry will reach 43.9 billion dollars in 2014

In the afternoon of July 15, KPMG recently conducted a survey of more than 280 executives in the Asia-Pacific region, and China's service outsourcing and shared services business has grown rapidly, and has begun to surpass the market share of India and other Asia-Pacific outsourcing destinations.　　The total size of China's outsourcing industry is expected to reach $43.9 billion trillion in 2014. The survey found that more than 80% of the Asia-Pacific executives surveyed adopted a strategy of outsourcing, shared services, or both, and they now consider China to be the preferred place to set up a shared services centre. 42% of respondents said they had set up at least one Shared service center in China. In terms of outsourcing, 41% of executives surveyed said their third-party outsourcing service providers were in China.　　In addition, 36% of the executives surveyed have adopted both strategies in the Asia-Pacific region to save on operating costs.　　Singapore ranked second in the ideal site for a Shared Services centre (29%), followed by India (25%), Hong Kong (22%) and Malaysia (20%). "As outsourcing service providers continue to expand their services, China continues to have great potential in the field of service outsourcing," said Edge Zarrella, a global partner at KPMG's China Information Technology Consulting service, Chan Liang. At present, the development of the shared services business is more rapid. Although China has not yet reached the same level of maturity as India, the growth of China's service outsourcing industry is fairly rapid.　　While many Western companies may still use India as the preferred place to outsource, China is certainly the preferred outsourcing base for executives in the region. China's onshore and offshore outsourcing contracts were only $7.5 billion trillion in 2007, according to KPMG. According to China's Ministry of Commerce data, the contract volume increased by nearly three times to $20 billion in 2009.　　KPMG expects the overall size of China's outsourcing industry to reach $43.9 billion trillion in 2014. "Shared services have grown widely in China-information technology Outsourcing (ITO), Business process Outsourcing (BPO) and knowledge process outsourcing (KPO) are evolving," explained Ning Wright, a Liang partner at KPMG's China service outsourcing management consultancy. This is different from the development trend of other markets in the region. The ranking of accounting services in the Shared services center has gone beyond information technology outsourcing services, showing that business process outsourcing (BPO) has surpassed IT outsourcing (ITO) in China, which may not have occurred elsewhere. "The research also shows that low labor costs are one of the factors for decision making when choosing outsourced service providers (51% of respondents think this is the most important factor), but it is clearly not the only determinant."　　When asked about the main factors to consider when sharing a service center, most respondents pointed to the two major factors of low labor costs and language proficiency (53% per cent). Cost is not the only major factor in outsourcing strategy, Liang said.It is equally important and even more important to ensure that outsourced or shared service bases provide reliable and adequate talent. Of course, language, expertise and infrastructure are also important considerations.