China is in a remarkable position to become a superpower in IT outsourcing in less than five years’ time. Recent fundamental changes and trends also will amplify the growth of the China IT services industry. There are five key drivers for China’s IT outsourcing market growth. Many of the research companies ignore these drivers, but all add to the success of China’s IT software and services sectors:

From operating systems to 3G, China has already made an impact on standards, and, with major events such as the Olympics in 2008 and World’s Fair in Shanghai in 2010, its influence will continue to grow over the next five years. Standards development has already become an important influencing factor in the development of China’s IT industry. On one hand, technological standards are the lifeline that determines the prosperity of an IT enterprise and function as a key information industry development index for the nation, on the other hand, disputes on domestic IT industry-related standards are becoming more and more intense. The domestic IT industry is eagerly awaiting the launch of the standards, and China is emerging as a key player in shaping the standards that will define the nature of global competition in the technology arena.

Technology standards are established in a marketplace when a critical mass of vendors and customers adopt a certain technology. In the near term, China will be successful in defining standards, as its large domestic market, low-cost IT services sectors and centralized government provide a competitive advantage.

China has a fast-growing IT talent pool. According to a research, there are about 2 million software developers in China, with a CAGR of 22 percent over the last five years; in addition, there are currently 5.86 million engineering graduates, with a CAGR of 13 percent.

Outsourcing IT to China brings more opportunities in the fast-growing Chinese market. Technology services companies must pay careful attention to China’s regulations and changing technology standards and adapt their strategies accordingly. China will become the largest IT outsourcing player, and it will be to your own peril to ignore this powerful and important market.