This IDC study explores the current status of the China-based offshore software development market as well as vendor ranking in 2012. Because of the pressure of rising costs, more and more companies have recognized the cost advantage is temporary for China local vendors to win the contact, they hope to build core competences by providing the value added and efficient services for clients. 2012 witnessed a year of rapid development and sharp transformation for the China outsourcing market. In 2012, the China outsourcing market experienced a dynamic merger of equals, buyouts of core business units, as well as the establishment of joint ventures.
Continuous expansion due to solid market demand and government support in recent years has promoted China-based IT service providers to actively engage in merger and acquisition activities, as they seek to achieve even greater scale. Although enterprise scale is often a primary vendor selection criterion that clients apply, the increasing demands for services such as IT consulting, business intelligence and analytics, system architecture design, financial back office support, and industry applications management are causing outsourcing providers to move up the value chain from low-end to high-end services, so the project experience, the industry domain knowledge, as well as the service levels are growing concerned by clients.
"China-based outsourcing firms have already reached the point of using customer requirements as a guide for innovation, as opposed to focusing solely on building scale. They are increasing the percentage of innovative services on top of their traditional steady outsourcing services," says Samuel Li, senior analyst, Services, IDC China.