China IT Outsourcing Evolving

Interesting and informative post, entitled, "China's Software Outsourcing Industry Continues to Evolve," over at the Go East-Outsourcing to China Blog. Post posits that China's outsourcing industry is now entering its third phase, consisting of the following:

The stage that we're entering now is interesting for a number of reasons. Foremost among them is that the industry is maturing and becoming a "real" business. Investors are backing Chinese outsourcing companies with significant financial resources and are expecting them to win. We're also seeing a wave of very skilled managers moving into senior level positions in the industry. They are generally, either Chinese returnees with very strong western experience, or aggressive managers that learned their lessons at some of the leading companies in the earlier stages.

Any client with the slightest level of interest can find a list of vendors and details about their offerings. A large, and growing, group of sharp analysts is covering the Chinese software outsourcing space and they are actually traveling to China to gain an understanding of the vendors. The mainstream media runs several stories on Chinese outsourcing and the companies involved every day.

Competition is fierce and winners need to be hitting on all cylinders. Execution really matters. Delivery has to be world class, as does both sales and marketing. The competitors have the resources, and are increasingly willing to spend money on infrastructure, training, recruiting and external messaging in order to gain market share. Vendors have to offer services that clients want, with good quality at competitive prices. Beyond that, they have to achieve a scale, in terms of both revenue and delivery team size that allows them to be taken seriously in the global outsourcing industry.

The post goes on to predict that "at least one, and maybe two, organizations will emerge as the clearly dominant companies by the middle of 2008."