Global Sourcing (GS) Market Update: March 2008 Preview Deck Topic: Mapping the Landscape of Chinese Suppliers

Transcription

1 Global Sourcing (GS) Market Update: March 2008 Preview Deck Topic: Mapping the Landscape of Chinese Suppliers

2 Background and methodology of the research Background of the research The Chinese services outsourcing and offshoring market is currently in the early stages of market maturity and growth. The provider landscape is fragmented and is characterized by a large number of small-sized suppliers. While there are a few multinational suppliers that have established presence in China, some local Chinese suppliers are also making their present felt in the global arena. This study aims to help the outsourcing community (i.e., buyers, suppliers, investors, and industry observers) better understand the capabilities of some key China-centric suppliers. This study focuses on China-centric suppliers only. China-centric suppliers are those that are: Headquartered in China, or Have a majority of their delivery workforce in China Captive operations and China operations of global suppliers were excluded from this analysis. List of suppliers covered: Achievo Augmentum Bleum Dextrys (formerly Darwin Suzsoft) Freeborders Longtop International Neusoft 2

3 Table of contents (page 1 of 2) Topic Page no. Section I: Introduction and key messages 4 Background and objective 5 Scope and suppliers covered 6 Key messages 7 Section II: Chinese offshore market overview 8 Summary 9 Market maturity 10 Size and growth of the China offshore services market 11 Share of IT and BPO services in the China offshore market 12 Factors driving demand for services from China 13 Examples of firms operating in China 14 Section III: Supplier landscape 15 Summary 16 Scale of Chinese suppliers 18 Sources of demand for China-centric suppliers 19 By geography 20 By vertical 21 By service offering 22 Supplier delivery locations 23 Mergers & acquisitions 24 3

4 Table of contents (page 2 of 2) Topic Page no. Section IV: Challenges and implications 25 Challenges 26 Implications 27 For buyers 27 For suppliers 28 Section V: Appendix 29 Supplier profiles 30 Achievo 30 Augmentum 31 Bleum 32 Dextrys 33 Freeborders 34 Longtop 35 Neusoft 36 Glossary of terms 37 References 39 4

5 Overview and abbreviated summary of key messages China continues to receive attention as a potential offshoring destination, but suppliers based in China are little known compared to the giants exploding out of India. In addition to assessing the current supplier landscape in China, this report provides a detailed analysis of seven China-centric suppliers their size, markets served, and delivery locations. Some of the findings in this report, among others, are: Chinese offshore market overview Supplier landscape Challenges and implications The Chinese offshore market is in the pioneer stages of maturity, with IT being more mature than BPO The market is witnessing increased activity from multinational captives, global suppliers, as well as local Chinese suppliers The majority of China-centric suppliers are fairly small, with the average firm having less than 2,000 employees Suppliers are present in multiple locations across China. In addition, most suppliers have a portion of their workforce operating onshore in client geographies, especially North America and Japan Intellectual property (IP) and data security concerns, language and culture barriers, employability of the labor pool, geo-political risks, and market fragmentation are some of the key challenges that need to be addressed to ensure continued growth of the Chinese offshore market 5

6 This study offers a deep dive into key aspects of the supplier landscape in China; below are four charts to illustrate the depth of the report ILLUSTRATIVE Market maturity China offshore services market size ~X% Market value creation Philippines IT ADM China BPO China IT ADM India IT ADM 1 India BPO Philippines BPO Pioneers Emerging rapid growth Reaching maturity E 2009E 2010E Key client geographies Key verticals served 100% = ~XX employees Geography 4 Geography 3 4% 8% Supplier Verticals Supplier 1 Automotive Digital entertainment Financial services Supplier 2 Supplier 3 Supplier 4 Supplier 5 Key focus vertical Supplier 6 Supplier 7 Hi-tech 49% Geography 1 Healthcare Manufacturing Geography 2 39% Natural resources Retail/CPG Telecom Transport/logistics Source: Everest Research Institute (2008) 6

7 This report also contains supplier profiles of key Chinacentric suppliers Supplier 1 is one of the largest China-based IT services company FICTIONAL EXAMPLE Dimension Description Revenue (2007) US$ million Employees (2007) 800 employees Delivery center locations (in China) Key buyer geographies Key verticals served Key service offerings Beijing Chengdu Dalian Guangzhou Shanghai North America Europe Asia Financial services Healthcare Hi-tech Telecommunications ADM IT infrastructure outsourcing BPO Sources: Everest Research Institute (2008); supplier interactions 7

8 Appendix: Additional research references The following documents are recommended for additional insight on the topic covered in this Research Report. The recommended documents either provide additional details on the topic or complementary content that may be of interest 1. What s happening in China: A Curtain-Raiser on the IT and Business Process Services Exports Market (ERI W-0172); This research focuses on the Chinese IT and Business Process Services exports market, and provides a fact-based assessment of China as a global sourcing destination 2. BPO Market Update: Indian Supplier Landscape (ERI R-0160); This research includes comprehensive coverage of key Indian business process outsourcing suppliers including evolution, market segments, functional and vertical capabilities For more information on this and other research published by the Everest Research Institute, please contact us: Jimit Arora, Senior Research Analyst: Aminisha Gupta, Research Analyst: jarora@everestgrp.com agupta@everestgrp.com Everest Research Institute Two Galleria Tower Noel Road, Suite 2100 Dallas, TX Phone: info@everestresearchinstitute.com 8

9 Get the answers today that lead to tomorrow s success Everest Research Institute has the resources, experience, and capabilities to provide companies with the strategic intelligence, analysis, and insight that are crucial to making the right decisions in today s outsourcing marketplace. With the vision of our leadership team, the personal commitment, and indeed, the passion of our professionals to deliver real value to our clients, our organization is unsurpassed in its ability to guide your company s future success. Everest Research Institute Two Galleria Tower Noel Road, Suite 2100 Dallas, TX U.S.A info@everestresearchinstitute.com Everest Group 150 E., 52 nd Street, 16 th Floor New York, NY U.S.A Everest India Ground Floor, Tower A Unitech Business Park South City - I, Gurgaon National Capital Region India Everest Australasia Level 6, 90 Mount Street North Sydney, NSW 2060 Australia Everest Canada The Exchange Tower 130 King Street West, Suite 1800 Toronto, ON Canada M5X 1E Everest UK 83 Baker Street London, W1U 6LA United Kingdom Everest Netherlands & Continental Europe Atrium Building 3 rd Floor Strawinskylaan ZX Amsterdam Everest Australia 409a Wattletree Road East Malvern Melbourne, VIC 3145 Australia