China's Service Outsourcing Industry Development And Upgrading Of Industrial Structure

Since the 1990s,with the deepening of economic globalization and the rapid development of modern communications technologies and the further digitization and standardization of information and knowledge, more and more companies have activities in the non-core services to external companies to perform, in order to achieve the objective that bringing down the production costs, improving service quality, optimizing the industrial structure,focusing on core competitiveness and so on. In the worldwide, modern outsourcing services industry has vigorous development.The paper first explains the development of outsourcing services within the international extension. Through analysis the features and treads of global outsourcing services industry, we can see that outsourcing services industry in the world has the extensive development. The size of trade has been extended, the business scope has been expanded and participation in groups is also increasing. According to the UN CTAD and the World Outsourcing Association predict that the current global services market will increase 30% to 40% per year, and it had increased to 1.2 trillion dollars by 2007.United States, Japan and EU countries are the major countries who outsource its services to other countries. India, China, Mexico, Brazil and other developing countries are becoming the major countries who undertake outsourcing services. Among them, India is the largest one.Then the paper states the development of Chinese outsourcing services industry, and analyses its position in the global outsourcing industry value chain by using the global value chain theory.Through analysis the advantages and the weaknesses of Chinese outsourcing services industry, we find that China, as a latecomer country in outsourcing services field, has its advantages, such as rich but cheap labour resources, lots of primary talents with high-quality and so on. But at the same time, it exits many weaknesses. For example, its professional talents lack, its service outsourcing policy lags. Overall, Chinese outsourcing services industry had a faster development but has smaller scale, lack of core technology and poor international competitiveness. Using the global value chain theory, we can see that Chinese outsourcing services industry is still in the position of dominance in the global division of labour, located in the end of the global value chain, mainly engaging ITO business which has low-tech and small value-added. Compared with India, there is a big gap.As the global service outsourcing industry's competition is increasing and China has more difficult to develop European and American markets, Chinese service outsourcing industry is facing great challenges. But also to see that participating in global value chain provides a convenient channel for upgrading the industrial structure and improving our international competitiveness.Especially in the background of the new round of global industrial transfer, Chinese service outsourcing industry is facing unprecedented historical opportunity.In order to upgrade Chinese industrial structure and enhance its international competitive ability, the government and companies have to endeavor together. The government should provide great basic environment and system environment for the development of outsourcing services industry by constituting series of laws, carrying out preferntial tax policies, and supplying support funds.The companies first should develop the primary business which lied the end of the global value chain by having a reasonable business choice, generating the specialized division and carrying out the industry cluster strategy.At the same time,companies should engage the advanced business actively through technological innovation and famous brand, and finally accomplish its reconstruction and upgrading.