Topic:  New Technology Drives Transformation in Global Services Outsourcing and Its Impact on China

Outlines:

Capgemini is consistently recognized as global leader
in Outsourcing Services

Technology drivers are accelerating

Value Creation With Our Partner Ecosystem

Three emerging trends in the Post-Crisis Era
driven by new technology

§Industrialization: By competition pattern, there are now three major types of regions in the world: cost advantageous region, geographical advantageous region, and technical advantageous region. Although these three types of regions have gained market superiority and branding position by virtue of the three major competition elements, one single element is not sufficient to sustain competitiveness any more.

Three emerging trends in the Post-Crisis Era
driven by new technology

§Segmentation: In the post-crisis era, competition in the outsourcing industry will feature clear segmentation and the emergence of some outstanding features.

§Some cities have already shown the trend towards segmentation in terms of market positioning. Strategic centers such as Beijing and Shanghai have positioned themselves as outsourcing vendors. They have become offshoring contract centers and onshore contract awarding centers, preferring high added value services.

§Cities of geographical advantages, such as Dalian and Shenzhen, are making use of their gateway position to focus on the first and second stages of offshoring contracts.

§Cities like Suzhou, Wuxi and Kunshan, have been utilizing geographical advantages to win contracts from nearby strategic centers.

§Cities with technical cost advantages, such as Chengdu and Xi’an, have mainly concentrated on sub-contracting. These cities enjoying a large talents base.

§Cities like Wuhan enjoy cost advantages. Their outsourcing industries started relatively late, therefore they chose to centralize on sub-contracting, putting onshore market at core position to benefit from market vacancy

Three emerging trends in the Post-Crisis Era

 
driven by new technology

§Clustering: The outsourcing industry will show the trend of clustering. Cities in the same region will be cooperating closely to advance their outsourcing industries, sharing resources, and balancing shortcomings with advantages.

§The 20 outsourcing model cities in China have already formed three major clusters in the east. The three economic regions along the East coast have adopted a cooperation approach that puts strategic cities at the core, showing the sign of initial centralization . Among them, cities in Yangtze River Delta are those of the highest literacy rate, and the most advanced levels of economic development.

Impact in China

§Delivery Centers moving to Tier II cities

•Cost Pressure

•Competitive environment promoted in Tier II cities

•Regional Clusters

§Merger & Acquisitions

•Chinese Service Providers branches abroad

•Joint Ventures & strategic Partnership

•Merge / Acquire Foreign Service organizations

§Outsourcing Operations model in Captive Service Centers

•Outsourcing Operating model transition

•Growth in Global IT Providers local capacity

•Multi-functional Shared Centers

§Growing Domestic Demand

Outsourcing Market in China : Fact Sheet 2010

India is the leading global outsourcing hub closely followed by China

Forecast & Recommendations

Forecasts

§The domestic market continues expanding through government outsourcing.

§Offshore outsourcing market differentiation appears, and the “first tier” of Chinese outsourcing companies is going to change its structure.

§The cities would launch a new round of "preferential policies” on competition and investment boom. M&A activities will accelerate.

§Yangtze River Delta is expected to become the core of China service outsourcing industry

§The scale of China Service outsourcing market will increase to $28 billion to $32 billion in 2015.

§The mix trend of ITO and BPO would enhance and the importance of vertical industries & Domain specialization would be further promoted.