Cover Story

Promising market in the offing

Updated: 2011-05-20 10:19

By Liu Jiren (China Daily European Weekly)

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Strong growth prospects make Business process Outsourcing a winner in the long run

Business process outsourcing (BPO) and the strong demand for offshore outsourcing are set to be the new growth drivers of the future, according to the latest market data.

With an eye on boosting its resources and environment, China has been paying more attention to its services industry as part of its efforts to make economic growth more sustainable. Having a huge talent pool and competitive labor cost, China views BPO as a potential growth sector in the future.

The Chinese government has identified 21 cities as service outsourcing bases, and published more than 30 policies covering finance, taxation, banking, telecommunications and intellectual property protection to fully support the offshore BPO industry development.

During the 12th Five-Year Plan (2011-2016), the BPO industry in China will also rely on China's huge and expanding domestic market. As the world's second-largest economy, China's market opportunities present a favorable environment for domestic companies and offer strategic growth for multinational companies.

Due to these interlocking factors, China has been able to maintain a steady annual growth of 20 percent for the BPO industry.

Political and social stability, huge investment on infrastructure, potential domestic market and government support will play a key role in promoting the BPO industry in China.

Experts believe that the BPO industry in China is expected to grow very fast and many global firms will adopt an India+China model, for cost reduction, risk mitigation, as well as for market penetration.

The future certainly looks bright for China's BPO vendors. However, China still needs to invest in building an international brand in the outsourcing business.

Due to the immaturity of the Chinese domestic market, and rapid wage inflation in China, winning business and generating profit will need creative thinking and innovation. So China-based BPO vendors should seek an innovative strategy for business development.

In offshore outsourcing, with its geographic and cultural proximity to Japan and South Korea, China has an edge over other countries in these two markets.

But the English support capability still needs to be enhanced for a broader market with global delivery as the destination.

The Chinese government realizes this

and has invested more than $5 billion

annually in the training of foreign language professionals to ensure continuous supply

of globalized talents for industry development.

The huge number of overseas students coming back from English speaking countries all around the world also contributes to the English speaking workforce. But the labor cost for pure English speakers is not competitive enough compared to India or the Philippines.

So, avoiding commodity service and focusing on non-voice and high-end support is a wiser solution for Chinese vendors.

For the domestic market, without the driver of offshore cost difference, service model innovation becomes very important. Neusoft designed a business model of cooperating with a partner to provide value added services to car owners, offering information, help and guidance for finding any place the driver would like to go, and monitoring the condition of the car to ensure safety for the drivers.

In this model we teamed up with partners to design a new service product and provided it to the end-users as a paid service. Through innovation, the auto manufacturers, Neusoft (as BPO service provider) and individual users achieved a win-win situation.

Currently, car ownership in China is growing rapidly, so the prospects are quite optimistic.

Technical innovation is another focus. Enterprise users tend to favor utility-based services. The requirement of on-demand applications and elastic payment contribute to the prevalence of cloud based service models.

For application support and maintenance services, the cloud computing solution can achieve service sharing and cost reduction. The service sharing and consolidation of voice network system for customer service can also be implemented via cloud computing to reduce cost for clients.

In the healthcare field, Neusoft launched Xikang service with the concept of "cloud health", by investing in cloud computing management platform for healthcare service.

Neusoft applied cloud computing on city residents' health monitoring by using

terminal equipment for information collection, such as watch, pedometer and mobile phone.

The residents' health information of weight, blood sugar level, blood pressure and other statistics were collected and sent to a central database. Health advisory services were provided based on these data.

Applying this technology and using innovative thinkings the scope of the BPO service was expanded.

Globalization and innovation are Neusoft's strategies for sustainable development. In the past few years, we have established several delivery bases around the world to provide an onsite-offshore service delivery model to meet customer's needs in the global market.

In the domestic market we believe that the innovative service model will provide more opportunities for us, and contribute to the progress from "made in China" to "created in China".

The author is chairman and chief executive officer of Neusoft Corporation.


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