What is international outsourcing? What about his role?

Reasons, risks and steps of outsourcing non-core business.

Today, winners in global competition have learned to focus on a few carefully selected core skills, that is, those skills and knowledge that really distinguish them from their competitors. Through out-of-business, that is, entrusting some important but non-core businesses or functions to external experts, the leaders of enterprises can raise the overall actions of the company to the highest level in the world, and the required expenses are equal to or reduced to the current expenses. At the same time, they can often save some huge investments.

Business process outsourcing refers to the inspection of business processes and corresponding functional departments by enterprises, outsourcing these processes or functions to suppliers, and the suppliers reorganize these processes. BPO transfers all functions of functional departments (such as transaction processing, policy services, claims management, human resources and finance) to suppliers. Outsourcing providers manage these functions in their own systems according to service agreements. Some BPO contracts are paid according to the service level, which practices the supplier's income with business performance or cost savings.

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The so-called software outsourcing means that some software companies in developed countries hand over some of their non-core software projects to companies in countries with relatively low human resource costs for development, so as to reduce the cost of software development. As we all know, 70% of the cost of software development is the cost of human resources, so reducing the cost of human resources will effectively reduce the cost of software development.

Software outsourcing has become an important means for software companies in developed countries to reduce costs. At present, global software sales amount to $600 billion, of which software outsourcing sales amount to $50-60 billion. It is estimated that by 2005, the sales of software outsourcing will reach $654.38 billion. The rapid growth of software outsourcing has brought new development opportunities to India and China, where human resource costs are relatively low.

At present, many companies in China have started to set foot in the field of software outsourcing. At present, the cities with developed software outsourcing industries are Shanghai, Beijing, Dalian and Shenzhen. Taking Beijing as an example, 40% of software enterprises participate in outsourcing projects, and 60% ~ 70% of the turnover of the software industry comes from outsourcing. In Shanghai and Beijing, the monthly salary of a software outsourcing engineer reaches 7,000 ~110,000 RMB, while a software engineer with the same ability only needs 3 ~ 4,000 RMB in Wuhan. The characteristic of capital is that it flows to places with lower costs. Therefore, a large number of eastern software companies have been preparing to transfer to the central region recently. At present, the preferred areas are mainly Wuhan and Xi 'an.

What will software outsourcing bring to China software industry? It is not only an opportunity for economic development, but also an advanced software development management process and a strict software quality control system. Through the development of software outsourcing industry, China software industry will gradually bid farewell to the era of manual workshop development and enter the field of engineering and large-scale development.

In order to seize this historic opportunity, our government is making every effort to create a better investment environment for these software outsourcing companies. The government has established development zones in several key cities, established a number of brand-new software development parks, and given quite favorable policy conditions to software enterprises stationed in the parks. However, policy conditions and environmental conditions alone are not enough. The biggest impact on software enterprises is the cost of human resources. Whether we can provide a large number of software outsourcing engineers at low cost and meet the demand in quality is an important condition for our country to seize this historical opportunity.

Current situation of software outsourcing market in China

The global software outsourcing market has reached $654.38+000 billion. The contracting markets are mainly concentrated in North America, Western Europe and Japan, and the contracting markets are mainly India, Ireland and other countries. Among them, the American market is monopolized by India and the European market is monopolized by Ireland. Now, the Philippines, Brazil, Russia, Australia and other countries have joined the competition of software outsourcing.

IT outsourcing service is the product of the continuous refinement of social division of labor and the development of IT technology. Compared with hardware outsourcing, software outsourcing started late, but developed rapidly. At present, India is the largest market for software outsourcing. In addition, Irish, Israeli and China are also the main markets for software outsourcing.

IDG statistics show that the global software outsourcing market has reached $654.38+000 billion. The global software outsourcing market is mainly concentrated in North America, Western Europe and Japan, with the United States accounting for 40% and Japan accounting for 10%. Outsourcing markets are mainly in countries such as India and Ireland. Among them, the American market is monopolized by India, and 80% of Indian software industry relies on software outsourcing. India has become the largest country in software outsourcing. The European market is monopolized by Ireland. Now, the Philippines, Brazil, Russia, Australia and other countries have joined the competition of software outsourcing.

Although the IT outsourcing service market in China has been growing at a high speed, so far, the user base of IT outsourcing service is still very small. As far as the content and service mode of IT outsourcing service are concerned, it is mainly limited to the support and maintenance of network infrastructure and desktop equipment at the infrastructure level. In 2003, the market scale of IT outsourcing services was only RMB 4.26 billion. Among them, the scale of IT operation management outsourcing service is 265.438+0.6 billion, the scale of application management outsourcing service is 65.438+0.5 billion, and the scale of software outsourcing is 65.438+0.9 billion.

According to the Annual Report of China IT Service Market Research in 2003 ~ 2004, the scale of China IT outsourcing market reached RMB 3.52 billion in 2003, up 42.5% year-on-year. The main target markets of China's software outsourcing are Japan and the United States.

Trends and forecasts

BPO has become the trend of outsourcing development in the future.

Cooperative relationship and seamless integration mode will become the main ways of outsourcing.

The outsourcing market is highly concentrated.

The outsourcing market is mature, forming a standardized outsourcing market.

In-depth application of IT outsourcing in the industry

The development trend of domestic outsourcing service market is:

From an immature and highly dispersed market to a gradually mature and concentrated market.

The domestic outsourcing market maintained rapid growth.

China will become a new outsourcing industry center after India.

The service structure of IT outsourcing has been transformed, and the service has developed to the high end.

The emergence of large software outsourcing enterprises.

What does China's software outsourcing industry need to catch up with India?

The great success of China's economy makes people guess that China's software outsourcing industry will soon be on a par with Indian. However, McKinsey & Company recently conducted a research on the software field in China and found that it will take many years for China to pose a threat to India in the software outsourcing industry. First of all, China must consolidate its highly decentralized software industry and cultivate the scale and technology necessary to obtain large-scale international projects.

At present, China has not made much efforts in this direction.

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One thing is certain, China's IT industry is developing healthily. In recent years, the number of IT professionals in China has increased rapidly. Since 1997, the annual income of software and IT industry has increased by 42% every year, reaching $6.8 billion in 2003. Especially from 2000 to now, the number of English major graduates (very important in the software outsourcing industry) has doubled to more than 24 million. However, there are many shortcomings in China IT industry, which make these changes unable to be fully utilized. Although the income of IT industry in China is increasing, IT is only half that of India (the annual income of IT industry in India is $6,543.8+02.7 billion). The growth of IT industry in China is driven by domestic demand. Most of its customers are small and medium-sized enterprises in China, and what they need is software customized for them according to their needs. China's new software outsourcing business only accounts for 65,438+00% of the total revenue of IT industry, while the Indian figure is as high as 70%. Although the cost is relatively low, the operating gross profit of China software service companies is only 7%, while the average operating gross profit of similar companies in the world can reach 1 1%, because the projects they take over are often small in scale, but the quotations are relatively low.

scale

In order to form strong competition in the global outsourcing industry, China must consolidate its software industry. The top ten IT service companies in China account for only 20% of the market, while the top ten IT companies in India account for 45%. There are about 8,000 software service providers in China, of which three quarters have less than 50 employees, and only five have more than 2,000 employees. There are less than 3,000 software service providers in India, and at least 15 has more than 2,000 employees. Among them, Tata Consultancy Services (TCS), Wipro and Infosys have gained international recognition and customers all over the world. Without proper scale, it is impossible for China enterprises to attract top international customers. Because people usually think that small companies are partners with relatively high risks and low reliability. According to McKinsey's research, only 65,438+02% of China software service companies think that mergers and acquisitions and alliances should be given priority. Few managers in China software service companies have M&A experience, although their culture is

It is beneficial to the development of the organization, but it is obviously not ideal to rely on this culture to fight against new competitors. On the contrary, several Indian companies are considering acquiring China companies to expand their business.

quality

The dispersed state of the industry makes other problems of China software industry stand out, such as the lack of strict process control and product management. Only six of the 30 large software companies in China have reached CMM level or level 4, while all the 30 large software companies in India have reached this professional level. The survey found that a quarter of China companies are trying to implement CMM quality standards, but more than half of them said in the survey that these efforts are not necessary, feasible or worthwhile.

talent

Software service providers in China should also strengthen talent management. Most China companies do not attach importance to helping employees grow, and few people know how to introduce equity, training programs or other incentive mechanisms into talent management. According to McKinsey's survey, the annual turnover rate of software companies in China is as high as 20%, while the turnover rate in the United States is only 14%, although it has a highly mobile IT labor market.

other

With a larger scale and a better talent base, China's software service companies will have the conditions to solve other problems, such as establishing a credible brand in the international market and developing technologies in specific industries, such as finance and restricted industries. In addition, we should pay attention to protecting customers' intellectual property rights, overcome the short-term effect psychology based on projects, and devote ourselves to providing customers with long-term services.