India may still be the dominant destination in outsourced software development services. But it’s becoming a booming business in China. Earlier this year, the government chose 20 cities as outsourcing hubs to attract more international investment and provided them with tax breaks, labor hours systems and employment subsidies.
Over the past year, government-backed initiatives have seen software outsourcing organizations expand from Beijing and Shanghai into other cities including Shenyang, Chengdu and Jinan.
The Chinese government recently announced some additional financial incentives aimed at helping boost the nation’s outsourcing industry and bring more business from abroad.
By 2012, China’s software-outsourcing market is expected to exceed $9 billion. Application software development,system tests,software localization,and embedded software development account for about 80 percent of China’s software outsourcing market.
However,some of the challenges faced by the country’s software outsourcing service providers in the next few years include quality management,the availability of skilled talents and sustainable growth.
The latest AT Kearney’s Global Services Location Index ranked China as the second-most-attractive offshoring destination – and it has held that spot since the list began in 2004. Meanwhile, India has been ranked number one for the past five years.