Global Locations Compass - China

7 Nov 2011
by Sakshi Garg



China is the second largest economy in the world and is attracting a lot of interest as a delivery destination for global services. In 2010, China was reclassified as a Mature location on Everest Group’s Market Vista Locations Maturity Heatmap, based on market activity. China, with its large graduate pool, low cost of operations, and unique Asian language advantage, offers an attractive proposition for organizations looking at serving the Asian region. It also provides an opportunity to global players to de-risk their global delivery model. Additionally, it is witnessing significant market activity on account of the domestic market and the government’s impetus to develop the industry.

This research report provides in-depth analysis of China’s global services landscape across market characteristics, education system, and future outlook. It also provides detailed data and perspectives on 7 key cities in China spanning across labor pool, cost, market activity and risk analysis. The report will assist buyers and service providers in understanding the maturity level of China’s offshore services sector, government’s incentives to promote growth of the sector, and unique value proposition offered by various cities in China in terms of labor pool availability, language skills, etc. This would enable developing a holistic perspective for investors who are evaluating entering or expanding existing footprint in the country.

Comparison of market activity 

Scope & Methodology

  • The focus of the report is on China’s global services sector across captives and third party service providers
  • The analysis spans across IT and BPO services, and does not include KPO, engineering services / R&D
  • The report provides a deep dive on seven key cities in China: Beijing, Shanghai, Guangzhou, Dalian, Hangzhou, Suzhou, Chengdu. The profiled cities are  representative of the four economic clusters and diverse language capabilities available in China
  • The report leverages multiple sources of  information -  Everest Group’s proprietary databases (captives, service providers, cost, labor pool), extensive advisory experience in supporting clients with Location Optimization decisions, inputs from global services stakeholders and industry experts

China’s global services exports 


The report provides detailed data and analysis on the global services landscape in China, and is structured along the following sections:

  • Country overview, spanning across macro-economic, political and education system
  • Global services sector overview across market characteristics, market activity, enabling ecosystem, government incentives and key cities
  • Assessment of key cities in China across talent pool, cost, market activity and operating environment
  • Future outlook providing perspectives on industry growth and arbitrage sustainability
  • Implications for buyers and service providers

Some of the findings in this report, amongst others, are:

  • During the 2007-10 period, the global services exports from China increased at a rapid pace (CAGR of 43%)
  • ITO services contribute majority to the export revenue driven by the presence of global IT services providers, such as, IBM, Infosys, and TCS in China
  • Majority of global services exports are targeted towards Asian region (i.e., Japan, Korea, Hong Kong, etc.)
  • Multiple government initiatives and various incentives were instrumental in promoting the global services industry in China
  • China offers 20+ city options for the services outsourcing industry; Tier-2 cities account for a notable proportion of delivery centers and are emerging as credible alternatives to Tier-1 cities
  • The choice of city for an investor is governed by factors, such as markets to be served, size of the delivery center, and language capabilities
  • Both buyers and service providers have a positive outlook towards China in the services outsourcing space
  • Everest Group expects the global services exports from China to increase at a healthy rate over the next 5 years

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