Industry-friendly policies  trigger growth of business process outsourcing in China

Chinese outsourcing providers are upping the ante to gain more customers and business amid stiff competition from other outsourcing majors like India and the Philippines.

Backed by a slew of industry-friendly policies and other inherent advantages like low cost and the growing tribe of English-speaking people, Chinese outsourcing companies are now making a move up the ladder and grabbing projects at the upper end of the value chain.

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That the outsourcing industry has immense potential in China can best be gauged from the latest data from the Ministry of Industry and Information Technology (MIIT). In its figures for May, the ministry says that the combined value of China's outsourced industry has clocked a 35 percent year-on-year growth to 270 billion yuan (29.5 billion euros). The industry has also recorded a healthy growth in the past five years, between 30 percent and 50 percent.

"The world is flat," says Liu Ning, general manager of business process outsourcing (BPO) provider CompuPacific International (CPI), quoting the well-known book written by Thomas L. Friedman to explain China's meteoric rise.

Based in Xi'an, the capital city of Shaanxi province in Northwest China, CPI has been ranked by consultancy firm Gartner as the biggest BPO company for US outsourced business in China.

Liu says the rapid development of the Internet in the past 15 years has led to a cyclic shift in the business model of companies. "It has moved from trading commodities to trading services."

Invisible services are being realized through the Internet and there is a growing need across the world to reshuffle resources and the process of business to developing countries like India and China, Liu says.

Friedman quotes in his bestseller the words of former Infosys chief executive Nandan Nilekani: "Hundreds of millions of dollars were invested in putting broadband connectivity around the world, undersea cables At the same time, computers became cheaper and dispersed all over the world and there was an explosion of software, e-mail, search engines like Google, and proprietary software that can chop up any piece of work and send one part to Boston, one part to Bangalore, and one part to Beijing, making it easy for anyone to do remote development."