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Slowdown could aid outsourcing industry

China's outsourcing industry is making use of the global slowdown to branch into new markets as corporations shift to outsourcing to cut costs, said an industry report yesterday.

"We see evidence that many companies in Southeast Asia are in favor of outsourcing from China," Ning Wright, a KPMG partner said yesterday. "Moreover, many global outsourcing companies are setting up operations in China to target regional markets, including Japan.

"The financial crisis brings more opportunities for China than challenges for the outsourcing industry," said Wright. "Statistics in the first quarter have showed that China's growth is still strong."

It is expected that by 2010, China's offshore outsourcing work will more than double to US$5.6 billion, or 20 percent of its total outsourcing revenues, from 2007.

"China is very likely to catch up with or even surpass India in the outsourcing industry in five to 10 years, with China's strong growth and its huge domestic demand potential," said Wright.

The global slowdown has punished China's exports, making it even more attractive to develop its services industry.

In times of financial crisis, companies typically turn to outsourcing to save money.

The Chinese government has set an ambitious goal of developing a base of 10 internationally competitive cities to cater to outsourcing, encouraging 100 multinational corporations to transfer their outsourcing business to China, and to cultivate 1,000 big outsourcing companies with international qualifications by 2010.

Multiple outsourcing destinations around the world have sprung up besides India and China, including the Philippines, Malaysia, Romania, Ukraine, Brazil and Mexico.


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