With in-depth development of economic globalization and extensive application of information technology, trade component of service can be improved, triggering a new round of global industrial restructuring. Multinational corporations in developed countries will rapidly transfer non-core functions of services to other countries, particularly countries and regions with emerging markets. The competition has been going on in many countries.
In April 2005, in Boston, a crowded hotel ballroom, Gorbachev boarded the arena and gave a speech to software Commission in Massachusetts. People long applauded warmly welcome. But the purpose of the former Soviet President was not to discuss reform or Putin, but to praise Russia as having world-class programming technology and to encourage the more than 700 senior managers present to outsource projects to Russian software vendors. The world-class politician suddenly became a salesman which showed that the global outsourcing market is growing. In this area, developing countries from Argentina to Vietnam are competing for services businesses from the United States, Europe and Japan.
Developing countries have witnessed the economic prosperity of India brought about by outsourcing business, including 1.3 million jobs created in the past 10 years, so they also want to get a share. Many countries and even local governments are racking their brains to attract offshore businesses. And this field is rapidly expanding. In 2005, the size of global offshore IT and business process outsourcing market was 34 billion US dollars, which is expected to double in 2007. This gives more countries the chance to carve up the business.
Among the competitors in the global outsourcing business, there are developing countries with relatively more power, and they want to rely on low wages and adequate labor to gain profits. With its huge human resources and success manufacturing industry, China becomes the leader. In embedding software to the other products, China has considerable strength, and is now in full swing to make money from the information technology and business services that India is relying on to make money.
Russia also played the offshore card, except for targeting the high-end programming business. Their solid engineering and technical strength started accumulating during the Cold War period. Russia has efficient unemployed top-notch talent and can be found everywhere with only 1 / 5 of the wage offered by the United States. Luxoft in Moscow definitely is the most successful company. In international competition, the company made an impressive performance in undertaking outsourcing business: development of a document management system for the Boeing Company, development of a complex customer management tool for a Deutsche Bank.
Brazil and Mexico is not far behind, with not only the advantages of low-cost and technical strength leveling with India, but also the adjacent geographical advantages for the markets in Europe and the US. Even small countries like Nicaragua, Botswana and Sri Lanka also want to seize this opportunity. In order to attract customers, they sent trade delegation to participate in outsourcing exhibitions, subsidized training of personnel and office park construction, and providing tax incentives. Nicaragua see this as a matter of urgent task from the president to all the people.
Singapore and Dubai disclaimed about their supreme security and the legal system to deal with high security business and commercial overall business. Philippines, taking advantage of their historical and cultural background and a solid level of English sought business relating to English call centers. Central and South American countries won the call center market in the United States with their Spanish advantage. American back office operations are carried out vigorously from Argentina to the Rio Grande.
Africa as a centre outsourcing is perhaps the most surprising thing recently. South Africa already has more than 500 call centers, providing services to Lufthansa, the United States General Electric Company, and many other companies in English, Dutch and other languages. Lead by South Africa, other nations are catching up with the trend. Egypt sells itself as a low-cost expert in European language call center. Recently the country expected to come to the point of the trend is Botswana, which is promoting its own English ability, good bond rating, tax breaks and staff training subsidies, with a view to attracting a call center in the country.
Let us go out of the country to get a real feeling of the pace of development in the new zones of the field of outsourcing.
India: the leader in services outsourcing
India software industry has been in rapid development in recent years, and industry output value of India's software and information services has reached 12 billion US dollars. Nowadays India's software exports to 105 countries and regions around the world, which gains an export volume that is more than 20 % of India's total exports, and possession of the entire gross national product ratio has been more than 2%.
India attaches great importance to the software industry. India's software companies have more than 650,000 engineers, the total number of their employees ranks just after the United States in the world. 160 universities and 500 colleges in India all have set up the software department. About 178 thousand software technicians graduate from the university annually and about 73,000 to 85,000 of them will enter the software industry.
India also has its own software cities such as Beijing, Shanghai or Dalian in China, of which Bangalore is the most famous. The Bangalore software and technology park is only 1.5 square kilometers, but it is now the world's fifth largest information technology centre and one of the world's top ten Silicon Valleys. At present Bangalore is recognized as the birthplace of the software outsourcing industry, as well as the most successful place in developing software outsourcing industry.
India's Bangalore International Tech Park was founded in 1992 with a total investment of 400 million US dollars. The park was constructed jointly by Singapore consortium consisting mainly of the Tengfei Group which is renowned for developing industrial park, India's largest conglomerate Tata Group, and the Karnataka government. Currently 129 enterprises are registered and operating in the park of which 65 percent are multinational companies, and many Fortune 500 enterprises have set their software development affiliates in the park. The industries in the park include information technology, electronic telecommunications, automobile, chemical and biological technology, financial services and so on. The park played an important role in the process of developing Bangalore to be India's software city, the world's fifth-largest information technology centre and one of the world's top ten Silicon Valleys.
An outsourcing industry throughout the nation
The most important factor of India's successful software outsourcing industry is that they strive to do the best in every point of view and field.
Apart from the focus on quality, India's software enterprises have also made vigorous efforts to train software professionals. To meet the demand for software outsourcing business development, and the park trained a large number of software blue-collar workers. The Government also reserved a large number of talents for the development of the software industry by setting related courses on software technology in schools, sending students to trainings abroad and other measures. In the information infrastructure, the Indian government has invested to provide high-speed, reliable data communication connections for software enterprises, overseas R & D institutions and persons. Now India's satellite communication facilities and the Internet not only enable convenient communications among all the domestic software technology parks, but also those with every corner of the world. In order to promote software exports, the government has also set up a special intermediary service institution, some science and technology parks like this have also established their own international business support centers to strengthen their communication with the United States business community. All these organizations have made outstanding contributions to the development of the software industry in India.
