The Research On The Upgrading Of China’s Service Industrial Structure Of Undertaking International Service Outsourcing

With the rapid development of global information technology, international service outsourcing is becoming a major global industrial transfer trend and the position of the international service outsourcing in global value chains has been significantly improved. International service outsourcing which develops on the basis of intra-product specialization theory, has closely related to international capital flow, technology spillovers and other factors. With the benefit of international service outsourcing, the level of human capital, the quality of capital inflows, technology and management knowledge can be greatly improved, which is beneficial for the adjustment and upgrade of our service industrial structure. For the purpose of reducing production costs, improving their core competitiveness or optimizing the industrial structure, many multinational corporations usually transfer its own non-core services business to other enterprises. In addition,international service outsourcing has several features such as low pollution, low consumption, high technology and high additional value. Therefor, sizing the opportunity of outsourcing is a wise option to promote the development of our service industry and to optimize industrial structure.However, China is faced with a lot of challenges. Such as, does a longterm and stable association exist between international service outsourcing and the Industrial Structure Upgrading? Whether the both side promote each other? How to promote? All these problems are needed to further research and discussion.With a combination of current theory and practical cases, this thesis is divided into five chapters to figure out the influence that international outsourcing service has on the upgrading of service industrial structure in China. It first introduces the concept of international outsourcing service and its theoretical basis. Literature review part involves three aspects, namely, introduction of related concepts, causes of outsourcing service and how service industrial structure upgrades under the influence of outsourcing service. This analysis points out four upgrading approaches in theory:technological advance, capital accumulation, employment opportunities and industry agglomeration. Furthermore, his paper shows the current situation of foreign outsourcing service in China and its impact on our structure of service industry. In general, China witnesses a rapid growth in outsourcing industry whose potential can still be huge. Both the added value of service sector and employment opportunities are on the increase in China. Our outsourcing service relies mainly on ITO while BPO and KPO have considerable development potential. Recently, Chinese outsource industry remains at the low end of the whole industry chain and requires a constant adjustments and upgrades. As is stated above, this paper adopts "capital" as a variable, based on the model of consecutive intermediate input trade, brought forward by Feenstra and Hanson (1996). In this way, the transmission mechanism between international outsourcing service and service industry upgrades can be analyzed thoroughly. Under the background of globalization, this paper also elaborates how a country gets into the high end of Global Value Chains quickly through providing international outsourcing service. Then, the theoretical model for industrial upgrade is put forward on the basis of Cobb-Douglas Production Function. This theoretical model explains how outsourcing service influences the industrial upgrade, which lays a solid foundation for the empirical research afterwards. With the aid of relevant outsourcing data from1996to2011,it proves how international outsourcing service functions by means of establishing a measure model and conducting the co-integration analysis. This empirical research indicates that undertaking international outsourcing service can improve the structure of service industry in China. According to the above analysis, this paper concludes that in order to solve current problems of international outsourcing service, our service industrial structure can be greatly improved with the help of technological spillover, industry agglomeration, human resources and capital accumulation. In brief, it is considered that the only road for the adjustment and upgrade of our service industrial structure is to improve our capability of independent innovation, enhance technological standards and optimize the allocation of resources.