Nearshore Americas

China’s IT Outsourcing Sector Set to Grow by 25% Annually

China’s IT outsourcing industry has been forecast to grow at record pace over the next few years, with western businesses continually expanding their bases in the world’s second biggest economy to capitalize on the developing markets of the Asia-Pacific region.

According to a study by technology market research firm TechNavio, China’s IT outsourcing sector is on course to grow at 25% annually until 2018.

The report comes barely a day after Beijing announced plans to bolster its outsourcing industry. According to Reuters, the Chinese government is going to reduce corporate income taxes to 15% in a number of cities and set up tax-free zones for international outsourcing service providers.

Additional measures to cut the bureaucratic red tape and offer financial support to domestic outsourcing firms also figure on the agenda drawn up for boosting the sector.

Analysts say the low-cost labor and the supply of a large pool of computer science professionals work in China’s favor.

Outsourcing will not only help China diversify away from its carbon-emitting manufacturing industry but also generate millions of jobs for its youths who are increasingly hooking up to the web.

“China offers tremendous business opportunities for social media, mobility, analytics and cloud computing technology, which is expected to be a significant cost-effective key factor for the growth of this market,” says Faisal Ghaus, Vice President of TechNavio.

Today, according to TechNavio, the major players in China’s technology outsourcing sector include Digital China Holding, IBM, Accenture, Fujitsu and HP.

China’s red-hot growth and large consumer market have long been irresistible lures for western companies. Now, engaging with a Chinese IT company can help them gain a larger foothold inside Chinese territory.

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The research firm says China’s Internet population has grown significantly and will grow in excess of 8% in the coming years.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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