As a global leader on China Outsourcing and Market, Devott released its annual forecasts of Top 10 Trends in China Outsourcing via its international informational portal www.chnsourcing.com on December 25, 2012. Based on extensive data from its customers around country and globe, Devott studied the mechanism of the vertical transformation and undisclosed the drivers of the trends along with industry standards and own methodologies. Devott predicts that under the native influence of the shrinking global markets and sluggish recovery in major economic powers, national protectionism as demonstrated in US Presidential Election, China-Japan Island Conflict, reducing growth rate in China, there are numerous challenges and adversities China Outsourcing will face in 2013.
Prediction 1: The market size of onshore and offshore will be contracted slightly; Competitions over prices will be intensified.
It’s a bumpy road to recover the global economy. The unemployment rate keeps going up and the international offshore market will further shrink. As to Chinese outsourcing service enterprises, the European and American market will shrink dramatically with the re-emergence of trade protectionism and insourcing restart. To Japanese market, due to the declining Japanese economy as well as disgusting impact from political factor that the dispute on Diaoyu Island between China and Japan ,Japanese outsourcing market is getting fewer opportunities for China in 2013. Under high expectations, Chinese domestic market is still waiting for breakout because of without enough driving force from the State-owned enterprises and government agencies although domestic market increases fast. The overall recession of the onshore and offshore market directly results in more fierce market competition. Meanwhile, the majority of the companies are on the low end of the industrial chain that resulting from Chinese outsourcing industry’s remaining on primary stage, the price war is going to be intensifying in 2013 both for offshore and onshore market.
Prediction 2: Overseas investment from China based sourcing corporations will get more consensus; More Chinese companies will plan and implement their global strategies onshore in developed countries.
More and more work is called for being shifted back to local caused by American president election, which has become a big feature in the second industrial transfer for global service outsourcing. As the worldwide largest outsourcer, the United States leads the “outsourcing backflow“ trend which will drive the global outsourcing enterprises to reformulate the strategy of development and market. To set up branches and delivery centers locally in the U.S. will become one of the core trends for Chinese outsourcing industry in 2013. Many countries’ outsourcing enterprise will launch fierce rival in the U.S., especially the competition between China and India.
Prediction 3: Growth Drivers of China Outsourcing will be transformed rapidly, depending more on capital and market instead of incentives and low cost talent.
Through the rapid growth of the industry size, the development of the whole Chinese outsourcing industry is evolving from the basic embryonic stage to the upgrade stage, during which every factor coordinates and interacts with each other to establish an ecosystem for service outsourcing. Chinese outsourcing industry’s growth pattern is onto a turning point. “Market + capital” model is going to replace “policy + talents” to facilitate the future industry, so as to lead the industry’s transformation and upgrading.
Forecast 4: M&A activities will be increased considerably; so are hidden risks and negative impact of the Investments.
Under the shrinking domestic market and intensifying competition, as well as being driven by some industry giants such as Pactera, Achievo and The Devott Fund, the trend of investment and acquisition within outsourcing industry will further be continued in 2013. The trend of industrial integration will be intensified. However, due to the great risks of M&A, all kinds’ of problems gradually appeared in the process of M&A at the later stage. Consequently, the number of failing cases will be on an increase accordingly.
Prediction 5: Focus of the growth will be more on innovation than cost reduction.
Due to incapable of affording the innovation and transition for some enterprises after economic crisis such as market survey, trial operation, and risk and opportunity costs, they crave for outsourcing enterprises with professional abilities and practical experience as their intellectual strategic partners to help them improve efficiency and transform their businesses. Therefore, the value of outsourcing service is predicted to shift from cost reduction and core competence enhancement to innovation support to reshape their core competence. Meanwhile, the status of the outsourcing enterprises will be improved as well.
Prediction 6: “Big” is no longer growth objective. Fast deployment, flexible practices and vertical solutions are 2013 Performance Indexes in corporate board rooms.
In 2013, the global service outsourcing buyers will become more cautious on outsourcing strategy decision making and service providers’ choosing. Resources resolutions become very popular in this industry. With the development of the global buyers’ demand, the development of China’s outsourcing service providers will change their direction to “flexible structure, rapid iteration and fast reaction”. Global buyers pay more attention to enterprise solutions and service capacity and request the enterprise develop professionally.
Prediction 7: New Delivery Models and Business Processes Developed by “Cloud Platform” will penetrate deeper of enterprise markets.
Starting from 2013, cloud outsourcing based on the “cloud” platform and “cloud” model increasingly become the mainstream and trend in the development of outsourcing industry. With the core element – CCES (Cloud Computing Enabled Service) model, could sourcing drives the whole industry to achieve the transformation and upgrading and extend to 3.0 eras. The whole industry will be endowed with new connotation. At the same time, crowdsourcing as a new mode will get more and more respected and application by global buyers.
Predictions 8: New Outsourcing Models and Process Management Methodologies will appear widely in Big Data Era.
As data becomes a new hub to promote industrial development and the core element, a new service outsourcing segmentation field appear and rapid development – that is, great data outsourcing. As a new field of KPO, great data outsourcing based on data mining will be got full development in 2013. A large number of great data outsourcing enterprises will appear and gather abundance data outsourcing solutions. At the same time, the development of great data outsourcing will give rise to a new business model and accelerate technological progress.
Prediction 9: The weight of BPO in outsourcing industry will be increased. It’s expected the first public company in BPO vertical emerges in 2013.
In 2013, China’s BPO industry will develop rapidly from the document entry, data processing and other low-end level BPOs to high-end level BPOs which related to the core businesses. At present there is no one real BPO enterprise in 29 local service outsourcing listed companies. Until 2013, the situation will be broken and the industry will appear “competitive advantage gets sustainable” situation, the leaders will enjoy extra income.
Prediction 10: Supports and incentive policies and regulations remain key driving forces to China Outsourcing’s transformation and innovation
In 2013, the public platform construction funds and services tax and other services outsourcing policy are expected to extend. The whole service outsourcing industry will get a further development by personal training of service outsourcing, developing the international market, intellectual property protection and other aspects. At the same time, the state will take new measures on the new features appeared in the development of service outsourcing industry such as support large enterprises mergers and acquisitions and increase the management training subsidy of service outsourcing enterprises.
According to the problems China service outsourcing industry may face in 2013, “Forecasts and Suggestions of Service Outsourcing for China 2013” gives ten core development suggestions from the government and enterprise aspects. For more detailed information and download, please visit: http://www.chnsourcing.com.cn/top/tenforecast/2013/