Study on the Competitiveness of the Software Outsourcing Industry in Jilin Province Based on Diamond Model
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1 Study on the Compettveness of the Software Outsourcng Industry n Jln Provnce Based on Damond Model LIU Lqn School of Busness Admnstraton, Changchun Unversty of Technology, Changchun, lulqn2002@xnhuanet.com Abstract: Based on the analyss on the factors nfluencng software outsourcng ndustry from the vew of damond model,ths paper sets an ndcator system. Accordng to statstcal data, the paper uses the prncpal component analyss to evaluate compettveness of the software outsourcng ndustry. It shows that the compettveness of Jln provnce s at moderate level n Chna. In order to further develop the compettveness of the software outsourcng n Jln provnce, the paper puts forward some measures, that s: to optmze factors of producton of software outsourcng ndustry, to explored European & Amercan market on the bass of Japan, Korea market, to develop Industry Chan of software outsourcng ndustry, to promote the compettveness of software outsourcng companes, to mprove the soft envronment. Keywords: Damond Model, Software Outsourcng, Compettveness, Jln Provnce 1 Introducton Wth the developng of the software outsourcng, many scholars studed the meanng, reason, nfluencng factors and the development strategy of software outsourcng. Palva (2003) studed all the nfluencng factors of undertakng offshore software outsourcng, beleves that offshore software outsourcng s the mportant force to promote servce ndustry shft and Communcaton and Collaboraton of soft technology on a global scale. L Xaomao and Zhang Janjun (2003) thnk that nformaton technology outsourcng can promote development nnovaton and mprove market compettveness of companes. Lane (2001) beleves that the man reason of offshore software outsourcng s to decrease cost. Laura L. Pfannensten and Ray J. Tsa (2004) suggests that contract-ssung party should consder comprehensve cost whch consst of choosng cost, legal cost and delverng cost when they choose the contractors. Rajkuma and Man (2001) ponts out that the nfluencng factors of ganng contract-ssung party trust are contract, exploraton content, customers and employees. Satwk Seshasa and Amar Gupta thnk that hgh level of nfrastructure and low cost of human resource are the most mportant factors to undertake offshore software outsourcng. Zhang Nng and Han Wenyng (2008) analyzed the development condton of offshore software and nformaton servce outsourcng n Chna from the vews of country, ndustry and company, then based on the vews dvded the nfluencng factors nto macroscopcal factors, the mddle factors, and mcrocosnlc factors. L Ru and Wang Nng (2008) chose the software outsourcng contractor wth three-stage decson model. He Yoush and Qn Yong (2009) evaluated the ablty of four ctes n Jangsu provnce to undertake software outsourcng. The great majorty of scholars search and dentfy the key factor of nfluencng the ablty to undertake software outsourcng n the macro analyss, a few scholars comprehensvely study quanttatvely the compettveness of software outsourcng. So, evaluaton quanttatvely the compettveness of software outsourcng wth comprehensve method s the breakthrough pont of the paper. 2 The Development of Software Outsourcng n Jln Provnce The software outsourcng ndustry n Jln provnce acheves a seres of sgnfcant progress and shows some features. 728
2 2.1 Undertakng Manly Software Outsourcng from Japan and Korea Jln provnce neghbors upon Japan and Korea and have the locaton superorty, so t s the man busness goal of the majorty of companes to undertake the software outsourcng from Japan and Korea. The software outsourcng companes n Changchun undertake the outsourcng busness of Japan, many software outsourcng companes set up offces n Japan to specalze n the exploraton of Japan market and dspatch professonals each other wth Japan. The software outsourcng companes n Yanj undertake actvely software outsourcng from Korea wth the advantage of language and culture. 2.2 The Study Ablty of Software Improved The number of software companes whch gan double software dentty s about 366, among whch 7 companes passed the CMM evaluaton, 1 company passed CMMI3 evaluaton n Jln provnce. There are some software research nsttutes such as Jln Unversty and Northeast Normal Unversty n Jnln provnce. The ablty to research and develop software product s mproved. Near 800 software products s developed, among whch about 511 software products own ntellectual property rghts, 20 software product are awarded as country excellent software product and the market share n the forefront of the ndustry. 2.3 The Constructon of Industry Base Wns Intal Success Changchun Software Park, Jln Software Park and Yanban Sno-Korea Software Park are the bggest software outsourcng base. Electronc authentcaton, bologcal recognton and long-range educaton are developed n Changchun Software Park. Embedded software and applcaton software are developed n Jln Software Park. Software outsourcng and nformaton servce are undertaken from Korea and Japan n Yanban Sno-Korea Software Park. Changchun Software Park acheves sales of 1800 mllon Renmnb, n whch there are about 240 companes and 8000 employees. There are about 102 software companes and 3200 employees n Jln Software Park and the park acheves sales of 1000 mllon Renmnb. There are 29 companes and 1200 employees n Yanban Sno-Korea Software Park. 3 Evaluaton of the Compettveness Based on Damond Model 3.1 Establshng Apprasal Indcator System The apprasal ndcators are chose accordng to damond model put forward by Mchael Porter. Damond model put forward that ndustral compettveness s nfluenced by 4 key factors and 2 auxlary factors. The key factors consst of condton of factors of producton, demand condton, related and supportng ndustres, frm strategy, structure and rvalry. Condton of factors of producton ncludes the quantty, cost, qualty, level of specalzaton of factor of producton. Demand condton s comprsed of local demand and foregn demand. The related and supportng ndustres refer to the advanced supplers and compettve related ndustres. The auxlary factors consst of government behavor and challenge. Challenge and government behavor can makes companes to form and mprove compettveness. The key factors and auxlary factors rely and affect each other. The compettveness of software outsourcng s evaluated by the apprasal ndcator system composed wth the key factors and auxlary factors. The key factors are compared by the abltes of some tme pont. Government behavor s evaluated by the polcy of developng software ndustry and protectng ntellectual property rghts. Snce the challenge s ncdental and subjectve, challenge sn t evaluated n the paper. Consderng the collected data, ths paper sets an ndcator system whch nvolves 19 ndcators. (See table 1). factors Table 1 Apprasal Indcator System of Compettveness of Software Outsourcng Industry Factors of Producton ndcators Investment nfxed Assets n Software(C 1 ) Informaton Transmsson, Computer Servces and 729
3 Demand Condton related and supportng ndustres frm strategy, structure and rvalry Number of Staff and Workers n Informaton Transmsson, Computer Servces and Software(C 2 ) Number of People wth educaton attanment of College and Hgher Level (C 3 ) Average Earnng of Employed Persons n Informaton Transmsson, Computer Servces and Software(C 4 ) The Sellng Prce of Offce Buldng(C 5 ) Transacton Value n Techncal Market(C 6 ) Number of Moble Telephone Subscrbers (C 7 ) Broad Band Access Port of Internet(C 8 ) Language(C 9 ) Software Revenue(C 10 ) the total output value of ndustral(c 11 ) The total output value of electronc and nformaton manufacturng ndustry(c 12 ) The total output value of computer and offce equpment manufacturng ndustry (C 13 ) Telecommuncaton busness Wu ncome(c 14 ) Number of Software Enterprses(C 15 ) Number of top 100 Software Enterprses(C 16 ) The Income of Software Product(C 17 ) The Income of Software Technologcal servce(c 18 ) government behavor Polcy(C 19 ) The data of C 1 C 2 C 3 C 4 C 5 C 6 C 7 C 11 come from Chna statstcal yearbook 2009, the data of C 8 C 10 C 12 C 14 C 15 C 16 C 17 C 18 come from mnstry of ndustry and nformaton technology of the People Republc of Chna, the data of C 13 come from Natonal Development and Reform Commsson, the data of C 9 and C 19 s ganed from some experts. The statstcal data of the Tbet Autonomous Regon and Qngha Provnce aren t complete, so the Tbet Autonomous Regon and Qngha Provnce aren t evaluated and compared n the paper. 3.2 Analyss on the Compettveness of Software Outsourcng Industry SPSS 17.0 and prncpal component analyss s utlzed to analyze the data whch contan 19 ndcators and 29 provnces. Then the paper obtans the rotated component matrx, 19 ntal egenvalues (see table 2). The percentage of cumulatve varance of three components s more than 85%, so 3 components are chosen to analyze the compettveness of software outsourcng ndustry. Table2 Intal Egdnvalues Total % of Varance Cumulatve % Total % of Varance Cumulatve %
4 The component score coeffcent matrx and the standard datum whch come from the prncpal component analyss s used to calculate the value of the components. (See table 3) Accordng to the value and ntal egenvalues of the components, the compettveness of software outsourcng ndustry s calculated by the followng formula: 3 F = FW (1) r = 1 3 W = λ / (2) λ = 1 Fr s the compettveness value of software outsourcng ndustry; F s the value of the component; W s the weght of component; λ s the ntal egenvalues. The compettveness of software outsourcng s determned by compettveness of software outsourcng ndustry. F r. The more F r, the stronger of the 3.3 The Result of Evaluaton The compettveness of software outsourcng ndustry s ganed and arranged n order of sze. (See table 3) Table3 the Value of Compettveness of Software Outsourcng Industry Regon F1 F2 F3 F Regon F1 F2 F3 F 1 Bejng Hunan Guangdon g Hube Shangha Xnjang Jangsu Zhejang Inner Mongola Laonng Guzhou Fujan Shanx Chongqng Schuan Shandong Helongjang Tanjn Hebe Yunnan Nngxa Shaanx Jangx Hanan Anhu Jln Henan Guangx Gansu Concluson and Suggeston Table 3 shows that the compettveness of software outsourcng n Bejng provnce s best n Chna, whose value s The value n Jln provnce s only , the dstance of the support between Jln provnce and Bejng provnce s great. Besdes, the value of compettveness n Jln provnce s 731
5 laggng behnd the value n 13 provnces n Chna. So, the compettveness of software outsourcng ndustry n Jln provnce s at moderate level n Chna. In Northeast Chna, the compettveness value of software outsourcng ndustry n Laonng provnce s 0.140, and the compettveness value n Helongjang provnce s It shows that the compettveness n Jln provnce s at moderate level n Northeast Chna. In order to mprove the compettveness of software outsourcng ndustry n Jln provnce, some measures should be taken. 4.1 Optmzng the Factors of Producton of Software Outsourcng Industry Software outsourcng demands many good qualty labors and advanced technology. So, t s essental for Jln provnce to perfect the talent cultvaton and ntroducton and mprove the level of technology. Frst, accordng the demand of market, government, company and school should tran practcal workers by educaton and tranng. Second, the servce outsourcng company can ntroduce some labors wth much experence from abroad. Thrd, more captal and polcy should be used to mprove technologcal development n Jln provnce. Platform should be bult to promote transformaton from scence and technology nto productvty. Last, communcaton nfrastructure, such as telecommuncaton and nternet should be perfected. The cvl network and commercal network can be separated and developed respectvely, so that the commercal network can have more captal to develop. In ths way, network can meet the demand of developng nternatonal servce outsourcng. 4.2 Developng Industry Chan of software outsourcng ndustry The measures should be taken n Jln Provnce to promote the development of software ndustry unon, to encourage the development of manufacturng ndustry, telecommuncaton ndustry, servce whch are related to software ndustres. The software outsourcng ndustry cluster should be formed and the advantage of the cluster should be used to develop the software outsourcng ndustry. 4.3 Promotng the compettveness of software outsourcng companes Frst, accordng to the nternatonal and domestc stuaton, Jln provnce should help software companes to gan the CMM/CMMI certfcaton, to ncrease technologcal nnovaton and to form famous brand. Second, the advantageous enterprses should also be planted. Qmng Informaton Technology Co. s the most mportant company n Jln provnce, and ths company s one of the top 100 software enterprses n Chna. The experence of the company should be studed and be learned by other software company. Some potental company should be helped government of Jln provnce. 4.4 Improvng the soft envronment Frst, based on the experence of developng nternatonal servce outsourcng n Inda, Mexco, and other regon, the plan, goal and measures should be made n Jln provnce of Chna to develop nternatonal servce outsourcng. Second, system of preventng rsk should be bult n order to reduce the rsk of company. The government may support more fnancng channel and loanng guarantee for the company of undertakng nternatonal servce outsourcng. Thrd, nformaton platform should be bult to collect related nformaton for the company. Forth, laws of knowledge rght should be strengthened to protect the proft of the company. References [1]. Palva S.. Global Outsourcng of IT and IT Enabled Servce: Impact on US and Global Economy[J]. Journal of Informaton Technology Cases and Applcatons, 2003,(3) [2]. L Xaomao Zhang Janjun. Internet-based Outsourcng and Enterprses Innovaton[J]. Chna Soft 732
6 Scence, 2003,(1): 19-22(n Chnese) [3]. Lane S.. Offshore software development: Localzaton, globalzaton acrd best practces n the evolvng ndustry[j]. Aberdeen It servces Practce, Aberdeen Group [4]. Laura L. Pfannensten Ray J. Tsa. Offshore Outsourcng: Current and Future Effects on Amercan IT Industry[J]. Infornaton Systems Management, 2004,(4):72-79 [5]. Rajkumar T.M. Man R. VS.. Offshore software development[j]. Informaton Systems Management, 2001, 18,(2):63-73 [6]. Zhang Nng Han Wenyng. The Development and Influencng Factors of Chnese Software and Informaton Servce Offshore Outsourcng Industry[J]. Statstcal Research, 2008,(04):58-60(n Chnese) [7]. L Ru Wang Nng. Research on the model of choosng software outsourcng contractor[j].scence and Technology Management Research, 2008,(3): (n Chnese) [8]. He Yoush Qn Yong. Comprehensve Evaluaton of Cty s Undertake Capablty of Offshore Software Outsourcng n Jangsu Provnce[J]. Soft Scence, 2009,(12):86-91(n Chnese) 733
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