China's Software Outsourcing Continues to Boom

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India may be the global leader in outsourced software development services. But it's becoming a booming business in China, where the growth has exceeded 40 percent the past three years.
By 2012, China's software-outsourcing market is expected to exceed $9 billion. Application software development, system tests, software localization, and tailored embedded software development account for about 80 percent of China's software outsourcing market.
As demand for global outsourcing increases, the competition gets more intense. And China's having some difficulty keeping pace where software quality management system, software talent,[link widoczny dla zalogowanych], enterprise scale, and internationalization are concerned. China's largest software outsourcing company, Neusoft, employs about 15,000 people, and generates revenue less than $1 billion. On the other hand, software outsourcing enterprises from United States, Europe, and India are expanding very fast in China. Microsoft Corp. (Nasdaq: MSFT), for example, is adding partners to streamline operations. It has cooperated with ChinaSoft International, Digital China Holdings Ltd., Insigma Technology, Shanghai Baosight Software, Bright Oceans Corp., and other local partners in technology platform, software outsourcing, and training.
Other world IT giants such as IBM Corp. (NYSE: IBM), Motorola Inc. (NYSE: MOT),[link widoczny dla zalogowanych], and Nokia Corp. (NYSE: NOK) are also collecting Chinese partners. IBM China Global Delivery itself has more than 2,000 employees in mainland China. Infosys Technologies Ltd. (Nasdaq: INFY), Tata Consultancy Services Ltd. ,[link widoczny dla zalogowanych], Wipro Ltd. (NYSE: WIT), Satyam Computer Services Ltd. (NYSE: SAY), and other Indian IT firms have also set up R&D center or ventures to utilize China's IT workforce.
In the past, Chinese software outsourcing enterprises were based primarily in Beijing, Dalian, and Shanghai. Now, with the support of local government policy, Shenyang, Xi'an, Chengdu,[link widoczny dla zalogowanych], Changchun, Jinan, Chongqing,[link widoczny dla zalogowanych], and Guangzhou are all the headquarters for these enterprises.
What's ahead? Consolidation in the form of buyouts and mergers is expected among Chinese software-[link widoczny dla zalogowanych]. And given current global economic conditions, they are expected to win more overseas projects as businesses everywhere look to trim costs. More business opportunities within China's local market are also expected to emerge.