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The head of the Department of Service Trade of the Ministry of Commerce briefs on the development of service outsourcing in China in the first half of 2021
【2021-08-12】

In the first half of 2021, service outsourcing contracts undertaken by Chinese enterprises amounted to 879.3 billion yuan, with 564.8 billion yuan executed, up by 9.4% and 25.5% year on year. In breakdown, offshore service outsourcing was worth RMB 494.4 billion, with RMB 328 billion executed, up 22.4% and 22.5% respectively. (In dollar terms, service outsourcing amounted to $131.3 billion in the first half of the year, with $84.3 billion executed, up 33.3% and 29.0% respectively. Offshore service outsourcing was worth US$74.1 billion, with US$49 billion executed, up 26.7% and 25.9% year-on-year respectively.)

In June, service outsourcing contracts undertaken by Chinese enterprises amounted to 230.2 billion yuan, with 157.9 billion yuan executed, up 8.3% and 13.6% respectively. Offshore service outsourcing reached 129.6 billion yuan, with 90.4 billion yuan executed, up 13.6% and 17.9%, respectively. (In dollar terms, service outsourcing contracts undertaken in June was worth 34.9 billion U.S. dollars and the execution amount was 23.8 billion U.S. dollars, up 13.8% and 19.1% year-on-year. Offshore service outsourcing contracts undertaken was worth 19.6 billion U.S. dollars and the execution amount was 13.7 billion U.S. dollars, up 19.4% and 23.5% year-on-year.)

The service outsourcing industry moved forward steadily in the first half of the year, with the following characteristics:

First, emerging digital services and knowledge-intensive service outsourcing grew rapidly. In the first half of the year, offshore information technology outsourcing (ITO), business process outsourcing (BPO) and knowledge process outsourcing (KPO) undertaken by Chinese enterprises registered execution value of 148.1 billion yuan, 54.5 billion yuan and 125.5 billion yuan, an increase of 26.5%, 15.5% and 21.2% year on year. Online business demand surged, highlighted by the fact that offshore information technology outsourcing increased by 23 percentage points over the same period last year. Among them, the executed value of information technology solution services, e-commerce platform services, information technology operation and maintenance services, integrated circuits and electronic circuit design services increased by 137.1%, 54.7%, 33.1% and 32.7% year-on-year. The executed value of offshore knowledge-intensive industrial design services amounted to 52.7 billion yuan, up 45.7% year-on-year; management consulting services grew 78.1% year-on-year.

Secondly, the model cities continue to play a central role and service outsourcing in central and western regions grew faster. In the first half of the year, the 31 model cities of service outsourcing undertook offshore service contracts worth 407.7 billion yuan, with an executed value of 275.7 billion yuan, an increase of 18.7% and 19.5%, accounting for 82.5% and 84% of the national total. Driven by the model cities, other cities are increasingly active in developing service outsourcing business. The offshore service outsourcing contracts undertaken by them amounted to 86.7 billion yuan, with 52.3 billion yuan executed in the first half of the year, an increase of 43.3% and 41.7%. Their share in the national offshore service outsourcing rose by 2.5 and 2.2 percentage points. Central and western regions undertook offshore service outsourcing worth 21.8 billion yuan in executed terms, up 32.9% year-on-year, 10.4 percentage points higher than the national growth rate.

Third, the international market remains stable, with rapid growth in Belt and Road countries. In the first half of the year, the executed value of offshore services from the US, Hong Kong SAR, and the EU undertaken by Chinese enterprises amounted to 68.4 billion yuan, 62.7 billion yuan and 40.8 billion yuan, up 23.3%, 30.3% and 10.3%. These three markets remain the top three markets, altogether accounting for 52.4% of executed value of offshore service outsourcing in China. In the first half of the year, offshore service outsourcing from Belt and Road countries witnessed a contract value of 100.3 billion yuan and executed value of 63 billion yuan, up 50.5% and 26.7% respectively, taking a bigger share in total offshore service outsourcing.

Fourth, foreign-invested enterprises still play a dominating role, with fast development of the private businesses. In the first half of the year, foreign-invested enterprises undertook offshore service outsourcing contract worth 241 billion yuan, with executed value of 148.1 billion yuan, an increase of 13.4% and 18.8%, accounting for 48.7% and 45.2% of the national aggregate. FIEs continue to dominate the market. Private enterprises undertook offshore service outsourcing contracts worth 124.3 billion yuan, with executed value of 83.4 billion yuan, an increase of 32.9% and 29.1%, 10.5 and 6.6 percentage points higher than the national average.

Fifth, service outsourcing continues to create jobs and contribute to steady employment. In the first half of the year, the service outsourcing industry added 443,000 jobs, an increase of 14.2%, including 284,000 people with university degrees and above, accounting for 64.1%; and 159,000 people with other degrees. By the end of June 2021, China's service outsourcing industry has employed 13.352 million people, of whom 8.477 million (63.5%) have university or higher degrees, and 4.875 million hold other degrees. This further reflects the role of service outsourcing industry in job creation.