Source of Competitive advantage

Problem areas

The commercial law environment is one of the major obstacles that may hamper the growth of the ITO sector, experts say.

"Unlike other major outsourcing service destinations, China still lags in the maturity of commercial laws and regulations, especially in areas like data privacy and intellectual property protection," Yu of HCL says.

But analysts say China is catching up fast with other outsourcing service markets in this aspect.

"This shortage is an unavoidable growth process for every market to experience. Some achievements have already been made as the government has taken up many measures to improve the situation, including amending laws and regulations," says Wang from CCID Consulting.

"There is, however, a serious dearth of talent capable in outsourcing skills like operations, sales and marketing," says Wang Yue, president of Dalian Hi-Think Computer Technology Corp.

But the shortage of talent is also a journey toward better development of the industry, Wang says.

"Every year nearly 600,000 engineering graduates enter the Chinese job market. Add to this also a growing number of Chinese students returning home after studying abroad. Talent shortage will soon be a thing of the past," he says.

"We will focus on developing talents through various training programs, including job-related training, soft skills training and six sigma programs."

Mindset is another major obstacle that often comes in the way of the development of the BPO sector.

"Because China's BPO market history is not long, it usually takes a long time for clients to decide on whether to outsource the business to China," Poon from Capgemini says.

He says the local outsourcing service vendors have concerns, not only from the point view of service quality, but also from data security.

"Even though our company is a famous service provider, and we have stringent codes to ensure data protection, some local outsourcing vendors still have some concerns," Poon says.

Despite that, Poon believes the outsourcing market will develop quickly in China.

"If other countries take 10 years for example, I am very confident that it will take only five years in China," Poon says.

huhaiyan@chinadaily.com.cn