IT Services Outsourcing has Great Potential

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Electronic Data Systems (EDS) and China’s Ministry of Commerce (MOFCOM) have announced a milestone partnership, which aims to boost China’s role as a global giant in IT services. Under the Strategic Cooperation Agreement, EDS and MOFCOM will work closer to shape the industry’s direction, especially on policy and regulatory issues, as well as cultivate market growth opportunities. (Our illustration is taken from the EDS web site. And no, we have no idea what it signifies.)
A report released by EDS suggests China’s IT services outsourcing industry could generate $56 billion in revenue and create four million jobs by 2015,mobile development outsourcing, becoming a new engine for the nation’s economic growth.
Further it somewhat optimistically suggests that IT Outsourcing service providers in China could earn as much as $18 billion by 2010 and $56 billion by 2015.
Derek Sharp, vice-president of sales and business development of EDS Asia, said, ‘China is now facing a historic opportunity to become a leading player in outsourcing, if it can successfully overcome the challenges and capitalize on the opportunities in the coming years.’
China has been promoting its outsourcing sector in recent years to tap the booming market. The nation’s software outsourcing companies had $1.4 billion in revenue in 2006, up more than 40% compared with a year earlier.
Richard Zhang, director of Mckinsey & Company in Shanghai, a leading international consultancy that helped EDS prepare the report, said, ‘Globally,Pharmaceutical software, outsourcing demand greatly outstrips the existing supply.’
The potential outsourcing market is estimated to be as much as $465 billion in 2006 and $600 billion in 2010. However, according to Richard Zhang,Software Localization, only 9% of the total demand has been met.
The report is called Building a World-Class IT Services Outsourcing Industry in China and states China has distinctive advantages such as an abundant supply of raw talent, world-class infrastructure and low costs.