China’s Remarkable Growth in the BPM Sector

Recent years witnessed a steady and sustained growth in the BPM sector of China. With the support of a large domestic market and good pool of educated work force, China has emerged as one of the major outsourcing destinations.

According to the recent reports of National Association of Software & Services Companies (NASSOM), the country also holds a promising potential for further expansion in the upcoming years and is in a good position for expansion, especially in IT-BPM sector.

China gains in outsourcing. Image source

Market Size of BPM in China

The Eleventh Five-Year Plan (2006-2010) witnessed China’s outsourcing industry grabbing revenue up to US$14.4 billion (in 2010). Estimates shows that by the end of the period for the 12th Five-Year Plan (2011-2015), revenue from business process outsourcing will likely hit US$85 billion (by 2015).

According to IDC KPMG analyses and Datamonitor,  revenue of China from the BPM sector is projected to grow to $44 billion by 2014, irrespective of the value of $13 billion in 2009. Last year, 58% of the revenue for Chinese service providers was collected from local buyers.

BPM Sectors and Cities in China

China started its outsourcing operations about two decades ago. Its outsourcing market is estimated have grown at the rate of 30% annually till date. The outsourcing services are mainly offered in sectors like IT outsourcing, knowledge process outsourcing and business process outsourcing. They work mainly for companies operating in health care, finance, services, education and manufacturing.

All these operations are well concentrated in some of the major cities like Beijing, Chengdu, Shanghai, Shenzhen and Guangzhou. The first three cities are well known for business analytics, product development, research and testing related outsourcing.

Guangzhou is popular for outsourcing of engineering services where as the city of Shenzhen is well known for software applications development and its maintenance. Moreover, the Chinese government is striving to develop another 24 cities into major outsourcing destinations.

Major Companies in Outsourcing in China

Low production and labor costs are the prime attractions for increased outsourcing in China. Local players as well as global ones have established their niches in different locations. Some of the major players up the line are AT&T, Convergys, Accenture, IBM, and HP.

Local players like Neusoft, Dextrys, Bleum, and Agumentum also took advantage of the cost effective outsourcing in China.

European and American companies usually look at China as one of the preferred locations for outsourcing. 70% of the services to China are from companies based overseas. As global economic conditions still remain weak, China can gain competitive advantage in the BPM sector. Cost effectiveness and ready availability of skilled resources will continue to increase the scoope of business process management processes in China.

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