US software outsourcing company CSC, one of the world's largest IT outsourcing firms, said yesterday it will launch a new delivery center in China as the global financial crisis may force more Western companies to outsource their business to the country.
Michael Laphen, chairman and chief executive officer of CSC, said the financial turbulence would force more companies to outsource their business in pursuit of lower operating costs, thus creating more opportunities for outsourcing companies.
"Outsourcing will increase in difficult times as the financial crisis pushes companies to become more cost effective," said Laphen. "We expect further robust growth from China."
CSC's new delivery center, located in Tianjin, will open next spring.
It will serve both CSC's domestic and multinational clients in China and will have 500 employees within the next three years.
But Laphen declined to say how big its investment is in the new China facility.
Although the financial crisis has had a major impact on most of the world's economy, CSC remains optimistic about economic prospects in China.
It said the country's manufacturing and financial companies, which are two major customers for CSC in China, will continue to grow at a rapid speed.
During the past decades, multinational have been transferring non-core business to countries like India and China to reduce costs.
But as labor costs continue to rise in China, outsourcing companies in the country have been striving to go up the supply chain and earn money with more value-added services.
Lin Zheying, deputy director of foreign investment administration department under the Ministry of Commerce, said at an industry forum on Monday that the economic turmoil provided a good opportunity for China to develop outsourcing in service sectors, as many US financial institutions may have to outsource their business.
According to the ministry, the value of foreign contracts of Chinese outsourcing companies reached $1.9 billion in the first eight months, up 17 percent from the same period last year.
CSC entered the Chinese market in 1991 and now has around 300 employees in the country.
It has offices in Beijing, Tianjin, Shanghai and Guangzhou.
Globally, CSC has approximately 90,000 employees and reported revenue of $17.1 billion for the 12 months ended July 4, 2008.
Source: China Daily