China’s IT outsourcing sector grows by 40% in 2011

March 1, 2012: The statistics published by the Chinese Ministry of Industry and Information Technology shows that the Chinese Information Technology outsourcing sector has grown at 40 per cent during 2011 to reach USD 60 billion.

The statistics also indicate that the combined Information Technology services and software industry, which consists of the internal market has grown at 32.4 per cent during the last year to reach USD 292 billion. These statistics were reported by the Chinese news agency, Xinhua.

If the information given out by the news agency is to be believed, the industry has on the average achieved a growth rate of 4% during a period of 2006 to 2010.

The revenue from software exports has risen by 18.4 per cent during 2010-2011 to reach USD 30.4 billion. The revenue from software (development) outsourcing also experienced growth of 40.3 per cent to reach USD 6 billion.

The Chinese government is of the opinion that the steady rise of the economy and the increasing demand for such services within the country and overseas is responsible for the present growth of the sector. Some experts have a very different view on this and they believe that there are chances that the Chinese government might have window dressed the data to highlight the achievement of the party.

Meanwhile, analysts at Ovum have said that the statistics prepared by the government is similar to the one they have prepared for the region.  They also noted that things won’t be the same in 2012, and the growth of the industry will get affected.

The statistics shows that outsourcing sector in China is bridging the gap with that of India. According to the projections made by NASSCOM, the Indian outsourcing industry will touch the USD 100 billion mark in 2012. With the present growth rate, it is expected that the Chinese outsourcing sector will outrun the Indian outsourcing industry in 2012.

Jens Butler, Principal Analyst at Ovum says that the growth is a consequence of the maturing IT sector as a whole. He added that the investments made by the government in improving the infrastructure also have contributed positively for the growth of the industry.

Butler says that the services industry as a whole is experiencing growth in the global market, but in the case of software industry, it is difficult to make any predictions or assumptions. He also added that there are many Chinese vendors such as Digital China, Kingdee etc in addition to global players such as IBM, Microsoft and SAP who has contributed to the growth of the industry in China.

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