China’s desire to expand the out-sourcing of services requires the support of tax incentives and policies, industry experts say.
Michael Corbett, chairman of the 40,000-member International Association of Outsourcing Professionals, said the potential of the mainland’s outsourcing industry was so huge that its growth would surpass the estimated 13 per cent annual compound growth in the Asia-Pacific.
China stood to benefit from its massive domestic market and the large number of multinational firms despite rising costs of labour and land, he said.
“The development of services outsourcing to drive the next stage of China’s economic growth makes perfect sense,” Mr. Corbett said yesterday.
To create jobs and sustainable growth, the mainland is moving towards an economic model based on being the “world’s factory” of services from being the “world’s factory” of low-value exports.
Expanding outsourcing of services was one of the seven ways Premier Wen Jiabao has identified to stimulate foreign trade this year.
Sidney Yuen Tat-man, a director with global consulting service provider Convergys and an adviser to governments in Suzhou, Wuhan, Tianjin and Nanjing in developing services outsourcing, called for tax incentives and measures to attract investments in the industry.
“The question is how to bring in companies from Hong Kong and overseas to invest in services out-sourcing,” Mr. Yuen said. “Tax incentives and governments’ proactive participation are very important.”
He saw a niche in the mainland’s information technology sector. Sectors such as software and game development, engineering and human resources services could be a focal point of expansion and use the annual supply of 6.5 million graduates from the mainland’s universities.
Although the country is increasingly losing its low-cost advantage, Mr. Yuen said, overall costs were lower than those in the United States, the industry leader, accounting for two-thirds of the world’s estimated US$6 billion outsourcing business.
The services outsourcing industry offers higher salaries to mainland workers, Mr. Yuen said. For example, an IT engineer is paid an average 3,000-3,500 yuan monthly, the equivalent of a factory manager.
Mr. Yuen pointed out that competition is so punishing among Chinese provinces battling for a bigger slice of the services out-sourcing business that it results in wasteful use and overlapping of resources.
He added that provinces should customise the training of talent by setting up schools.
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Services outsourcing seen as new growth engine
Denise Tsang
7 March 2009
China’s desire to expand the out-sourcing of services requires the support of tax incentives and policies, industry experts say.
Michael Corbett, chairman of the 40,000-member International Association of Outsourcing Professionals, said the potential of the mainland’s outsourcing industry was so huge that its growth would surpass the estimated 13 per cent annual compound growth in the Asia-Pacific.
China stood to benefit from its massive domestic market and the large number of multinational firms despite rising costs of labour and land, he said.
“The development of services outsourcing to drive the next stage of China’s economic growth makes perfect sense,” Mr. Corbett said yesterday.
To create jobs and sustainable growth, the mainland is moving towards an economic model based on being the “world’s factory” of services from being the “world’s factory” of low-value exports.
Expanding outsourcing of services was one of the seven ways Premier Wen Jiabao has identified to stimulate foreign trade this year.
Sidney Yuen Tat-man, a director with global consulting service provider Convergys and an adviser to governments in Suzhou, Wuhan, Tianjin and Nanjing in developing services outsourcing, called for tax incentives and measures to attract investments in the industry.
“The question is how to bring in companies from Hong Kong and overseas to invest in services out-sourcing,” Mr. Yuen said. “Tax incentives and governments’ proactive participation are very important.”
He saw a niche in the mainland’s information technology sector. Sectors such as software and game development, engineering and human resources services could be a focal point of expansion and use the annual supply of 6.5 million graduates from the mainland’s universities.
Although the country is increasingly losing its low-cost advantage, Mr. Yuen said, overall costs were lower than those in the United States, the industry leader, accounting for two-thirds of the world’s estimated US$6 billion outsourcing business.
The services outsourcing industry offers higher salaries to mainland workers, Mr. Yuen said. For example, an IT engineer is paid an average 3,000-3,500 yuan monthly, the equivalent of a factory manager.
Mr. Yuen pointed out that competition is so punishing among Chinese provinces battling for a bigger slice of the services out-sourcing business that it results in wasteful use and overlapping of resources.
He added that provinces should customise the training of talent by setting up schools.
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