Everest: China Emerges as Mature Location for Outsourced Services Delivery, but Lacks Some Capabilities for North American Buyers

China’s Offshore Services Exports Focus on Japan, Korea, Southeast Asia

DALLAS--(EON: Enhanced Online News)--China has joined India and the Philippines as a mature location for offshore delivery of outsourced services, but the country is only best suited for regional work and lacks some capabilities that global companies seek for supporting North America and Europe, according to Everest, a global consulting and research firm. Everest presents findings and insights about the Chinese outsourcing market in a new research report, What is the True Maturity of China’s Offshore Services Market? Additionally, a one-hour Webinar will be held August 17, 9 a.m. CDT, to present study findings and insights.

“In the last three years, China has witnessed continued interest and activity, with service providers scaling up operations and buyers starting to experiment with more seriousness”

The report concludes:

• China is a mature offshore services destination, but a role only for regional support as more than three-fourths of China’s offshore services exports are focused on Japan, Korea and Southeast Asia
• China lacks some capabilities to play a meaningful role in support of North America and Europe; therefore, most global companies leveraging China drive regional and local support for their businesses in Asia
• China’s primary limitation is a lack of experienced project managers who have the requisite skills to interact with clients in North America and Europe. Challenges further limiting the scale of offshore services for these geographies are lack of adequate English skills and insufficient cultural affinity
• Concerns around data privacy and intellectual property protection persist and constrain the types of services and platforms that buyers are comfortable supporting from China
• Service providers are building scale, but the pace of growth for pure offshore services is small. Many service providers leverage their centers in China in a role to support specific modules (e.g., testing) for other delivery centers in India and other geographies

Everest’s designation of China as a mature offshore delivery location follows a cumulative series of comprehensive research findings:

• China’s emergence as a mature location was reported in Everest’s Market Vista Location Heatmap in the firm’s quarterly market report, Market Vista: Q2 2010, released in early August. Using the number of established Forbes 2000 captives and Top 50 service provider delivery centers as a metric, the Heatmap monitors the maturity of different locations and is a standard component of the firm’s Market Vista reports.
• In Everest’s market survey of buyer organizations earlier this year, reported in Offshore Locations: Buyers' Perceptions and Plans for 2011-2012, 28 percent of buyers cited China in their plans to expand offshoring scale within the next two years.
• Analysis of the landscape in China, supplemented by interviews with leading buyers and suppliers of offshore services, yielded additional insights.

“In the last three years, China has witnessed continued interest and activity, with service providers scaling up operations and buyers starting to experiment with more seriousness,” said Research Director Anand Ramesh. “In our advisory engagements, China is frequently cited by buyers as a consideration but is primarily playing a role as a regional center within their global sourcing portfolios.”

The Webinar on key global sourcing market developments in Q2-2010 will be held August 17 at 9 a.m. CDT; 2 p.m. GMT Standard Time. The Webinar also will feature a special section about additional insights on offshore services market in China. To register, please visit: www.everestresearchinstitute.com/Events/Webinars.

Everest’s quarterly Market Vista reports provide data and analysis of deal trends in the outsourcing and offshoring market, captive landscape, current and emerging locations, key supplier intelligence insights, and key developments across the top 20 financial services companies globally. Market Vista also includes location datasets, Breaking Viewpoint briefings, Market Vista Primer and Global Locations Insights newsletter.

For information about Everest’s research services, please visit www.everestresearchinstitute.com, e-mail [e-mail] or call [phone].

About Everest

Everest Group is a global consulting and research firm that comprehensively serves the sourcing market. An industry leader since creating the sourcing consultancy practice in 1991, Everest has earned a worldwide reputation for ongoing innovation by helping clients capture optimum value through sourcing strategies and implementation. Everest provides information, insight, and advice to help buyers, suppliers, and enablers of services effectively navigate all stages of the sourcing lifecycle. Committed to thought leadership, Everest is noted for its fact-based analyses and insights on the outsourcing, offshoring and shared services marketplace. For more information, please visit www.everestgrp.com and www.everestresearchinstitute.com.