Service outsourcing is an industrial form arising from further development of a new round of international division of labor and involves a number of industries and fields such as information, finance and medicine industries, which is characterized by high technical content, high added value, low resource consumption, few environmental pollution and strong job-creating capability. Accelerating the development of service outsourcing is of great significance to the strategic adjustment of China’s economic structure and to the enhancement of the development of an open economy.

I. Rapid expansion of business scale and steady increase in international market share

Between 2008 and 2012, the execution amount of China’s international (offshore) service outsourcing increased to USD33.64 billion from USD4.69 billion, representing an average annual growth of 60%. China’s share of the global offshore outsourcing market increased to 27.7% in 2012 from 7.7% in 2008, representing an increase of 20%, which had turned China into the world's second largest service outsourcing country.

From January to October 2013, the amount of service outsourcing contracts singed by China reached USD64.81 billion, representing a year-on-year growth of 41.6%; the execution amount reached USD45.66 billion, representing a year-on-year growth of 34.1%. Among which, the amount of international service outsourcing contracts undertaken reached USD45.25 billion, representing a year-on-year growth of 42.5%; the execution amount reached USD32.34 billion, representing a year-on-year growth of 36.3%.

II. Rapid growth in the number of enterprises and remarkable success in creating jobs for undergraduates

Between 2008 and 2012, the number of service outsourcing enterprises increased more than 5 times from 3,302 to 21,159, with the average annual increase of 4,000 enterprises, of which nearly fifty percent are new venture enterprises. A number of enterprises each with more than ten thousand employees had emerged; in particular, the number of employees of Pactera reached 24,000. By the end of 2012, the number of personnel engaged in the service outsourcing industry increased to 4.289 million from 527 thousand (i.e. about 800 thousand new employees per year on average), including 2.91 million undergraduates (accounting for 67.8% of the total). Estimating based on the international empirical data, China’s service outsourcing industry had indirectly created jobs for more than 14 million persons.

From January to October 2013, the number of new employee engaged in China’s service outsourcing industry reached 738 thousand. By the end of October 2013, the number of China’s service outsourcing enterprises reached 23,787, with a total of 5.034 million employees, among which 3.392 million received university degree (including junior college degree) or above, accounting for 67.4% of the total.

III. Gradual optimization of business structure and progressive rendering of a diversified pattern

The industrial structure has improved from a simple structure based on software coding and program testing in the initial stage to a diversified structure mainly based on information technology (IT) outsourcing accompanied by financial outsourcing, pharmaceutical research & development, process management and industrial design; the business structure has been gradually optimized. From January to October 2013, IT outsourcing (ITO), business process outsourcing (BPO) and knowledge process outsourcing (KPO) accounted for 54.3%, 13.8% and 31.9% respectively, where the KPO business had maintained its rapid growth.

IV. Leading role of model cities and significant agglomeration effect

The State Council successively identified 21 cities (including Beijing, Shanghai and Tianjin) as model cities for China's service outsourcing in January 2009 and February 2010. The Ministry of Commerce has, in concert with other ministries concerned, comprehensively applied relevant supporting policies and measures to give a full support to the development of model cities. The total number of enterprises or employees in such 21 model cities accounted for about 70% of the total in China, whereas the business size thereof accounted for more than 90% of the total in China, which showed an apparent agglomeration and driving effect. Under the impact of a leading role played by the model cities, another 12 cities have applies for the model city in China.

Translated by Tian Liping

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