The Economic Analysis Of Service Outsourcing

Following the great shift of global manufacturing occurred from the 80 years of 20th, a new round of transfer mainly represented as service outsourcing industry, has become an irreversible trend of development. The expanding market and optimistic prospects for the development have been the most important factors to judge whether the country or area is suitable for offshore services.According to the result that the International Data Center (IDC) researched on the decisions of 1062 American outsourcing enterprises in 2005, China has been expected to become the most competitive outsourcing country that the U.S. companies prefer.As a trade, financial, science and technology center of Southwest China, Chengdu has become the core city of China's third largest economy zone called "Chengdu-Chongqing Economic Zone". With a mature transportation, communications and other infrastructure, as well as a wealth of human resources, Chengdu has been listed as the first batch of service outsourcing base cities.Then, what are the motives for Chengdu to develop the service outsourcing industry? What are the advantages and disadvantages that Chengdu has to develop its service outsourcing industry? What kind of roads should Chengdu take in the future development of outsourcing service industry? Related to these issues, this article analyzes the development of Chengdu service outsourcing industry, and tries to provide some suggestion to direct the future development. The article is divided into six parts, which are introduction, theoretical basis and research review, theoretical study to compare the strengths and weaknesses analysis, policy recommendations as well as conclusions.The first part of this article reviews the related theories and literature of service outsourcing, which is useful to establish a theoretical basis. From a trade view of the labor division theories, services outsourcing is an important way to enhance production efficiency. What are the positive impacts that the service outsourcing industry may bring? A lot of scholars have done researches on this area, and the findings have confirmed that service outsourcing generated positive results.The second part elaborates the related concept of service outsourcing. According to the existing research, services outsourcing can be divided into two parts which are information technology outsourcing (ITO) and business process outsourcing (BPO), and the knowledge process outsourcing (KPO) is the high level of BPO. And this part also summarizes out the overall development status and characteristics of current domestic and international service outsourcing industry.The third part has established more competitiveness evaluation system for service outsourcing industry. And through the comparison among Chengdu, Shanghai, Xi'an, and Dalian Chengdu, it points out the advantages for Chengdu to the develop service outsourcing industry as well as some comparative disadvantage. The advantages that Chengdu has are shown as following:First, the rich basic technical human resources provides prerequisites for the development of outsourcing in Chengdu:Chengdu attracts a large number of returned overseas students and graduates to live and work in the city; colleges and universities train many graduates with basic qualities foreign language quality; more importantly, the personnel turnover rate of software enterprises in Chengdu is low and the staff stability is in a higher degree.Second, the cost of operation for outsourcing industry development is relatively low. Because Chengdu is located in western China and the labor costs are lower. In addition, Chengdu has more abundant land reserves and lower land prices, as well as office costs, power costs.Third, there is a good environment for supporting industry. Chengdu has always been Chinese key electronics industry bases. At present, Chengdu has developed a relatively complete IC industrial chain, as well as a wide range of electronic industrial system. Meanwhile, Chengdu has built bases of aerospace products manufacture, competitive tactical weapons and aerospace accessory products. In addition, there is a rapid financial industry development of Chengdu, so its automobile industry, machinery manufacturing, biotechnology and new materials industry all get a new breakthrough in scale. Fourth, Chengdu has a pleasant living environment to attract a lot of talent.Fifth, Chengdu has make a marked progress in IPR protection and created a good environment for the outsourcing development.Sixth, the Chinese central government gave Chengdu powerful support in post-disaster reconstruction support and the policy environment has obvious advantages for the service outsourcing industry.Meanwhile, the development of service outsourcing industry in Chengdu is also facing some shortages, such as the weak industrial base, the relatively backward infrastructure, the lack of professionals and so on.At last, the article has raised some relevant recommendations on how to improve the service outsourcing industry in Chengdu.