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China’s Service Outsourcing Keeping Growing Continuously

In recent years, China’s outsourcing service industry has developed rapidly and has now grown to be second only to India, the world’s second largest service outsourcing country. This is driven by a series of support policies of national government departments, as well as rapid macroeconomic development, technological advancement, domestic enterprise outsourcing demand and the ability to undertake outsourcing.

In 2018, Chinese enterprises undertook a service outsourcing contract amount of 13,233.4 billion yuan, an increase of 8.6% year-on-year; the implementation amount was 959.74 billion yuan, a year-on-year increase of 12.9%, a record high. In the first half of 2019, Chinese enterprises signed a service outsourcing contract amounting to 709.98 billion yuan, with an execution amount of 405.94 billion yuan, a year-on-year increase of 29.3% and 11.5% respectively. In the context of the severe and complicated international situation and the slowdown in global economic development, stable growth has still been achieved.

From the perspective of business sources, offshore outsourcing has developed rapidly, with a compound growth rate of 20.5% in 2011-2018. However, the proportion has been decreasing year by year, from 74% to 61%. In terms of business types, information technology outsourcing (ITO) still dominates knowledge process outsourcing (KPO).

With the rapid development of China’s economy, it has attracted a large number of multinational companies to invest in China. These multinational companies have used China’s low-cost advantages and policy advantages to vigorously develop offshore service outsourcing, thus promoting the rapid development of offshore service outsourcing. The data shows that in 2011, the execution amount of offshore service outsourcing contracts was US$23.83 billion, accounting for 74% of the execution amount of service outsourcing contracts. In 2018, the offshore service outsourcing contract amounted to US$120.38 billion, an increase of 8.2% year-on-year. The implementation amounted to US$88.65 billion, an increase of 11.3% year-on-year, accounting for 61% of the total implementation. In 2011, the execution amount of China’s offshore service outsourcing contract increased from US$23.83 billion to US$88.65 billion, with a compound annual growth rate of 20.5%. However, the proportion has been decreasing year by year, from 74% to 61%.

With the launch of the “One Belt, One Road” initiative in 2013, China has undertaken rapid growth in the scale of its national service outsourcing business along the “Belt and Road”. In 2013, China’s national service outsourcing contract implementation along the “Belt and Road” was US$7.22 billion, accounting for 15.9% of China’s international service outsourcing business. In 2018, the number of national service outsourcing contracts under the “Belt and Road” line reached US$16.88 billion (approximately RMB 111.71 billion), accounting for 19.0%. Among them, the service outsourcing of Southeast Asian countries was US$9.11 billion, a year-on-year increase of 13.5%, accounting for 54.0%. The importance of the “Belt and Road” market continues to increase.