The first China Service Trades and Innovation Development Summit was held in Wuhan, Hubei Province on November 30, 2016. The officials from Chinese Dept. of Commerce, Hubei Province and the City of Wuhan plus 15 outsourcing base cities convened to share their experience and know-how in the industry alone with the executives from US, UK, Russia, Latin America, Middle Europe, North Europe and Southeastern Asia. This summit ranks largest in its kind in China 2016, highest in the attending official and international executive level, and also the latest of its messages and topics on the global trends and industry movements:
Developing a globally competitive industry of service trades and sourcing is a growth strategy of almost all developing countries from India, a 1.1 billion population country in southeastern Asia, to Albania, a 3 million people country in middle of Europe. This means China not only competes with the existed providers for the existed global market shares but also with many new comers for the existed markets. The competition is more intense than ever.
Like China, most developing countries consider this industry as a key driver to their new economy; Like China, most of them provide various types of supports and/or incentives to the domestic and international companies operating there. With similar governmental supports, however, the results are different in different countries. Services and sourcing industries are closely related to knowledge and innovations, which are not linearly correlated with amounted of dollars and number of HR governments invest. Without central role of corporations developing key competency and technologies no government supports could develop a sustainable growth. This principle applies in both developing countries and developed nations. The rise and down of photovoltaic industry in USA is an example.
Same as manufacturing or product trades, there are “hard” and “soft” capabilities in service trades and sourcing businesses. The “hard” side includes technology skills, numbers of college graduates, R&D budgets, etc., while the “soft” side includes relationships, global management maturity, innovations, etc. It appears the “Soft” side is much weaker than the “Hard” side in China’s service trades and sourcing industry. If the imbalance persists, the continuous supports to the “hard” component will result in detrimental uneven growth of this important industry. Moreover, the imbalance between these two components could squanders the investments to either side, causing false growth projections and ruin valuable “short-cut” opportunities.
Service trades and sourcing envelops a wide range of verticals in financial, technology, logistics and global managements. It’s hardly practical for any developing country to become strong in multiple verticals in short period of development. It’s more than likely that a successful country builds its presence and values propositions from a couple of specific professional areas where their strengths are optimally integrated. The voice-centric BPO verticals in Philippine is a great example of this breakthrough strategy. It’s impractical to become an all-around player simply because of size of country, HR and investments.
A small number of executives with truly and successfully global market expertise and industry leading knowledge are crucial to develop trade services and sourcing industry. Majority of countries or companies consider their global marketing and sales as their weakest links in the business. What is needed, in fact, is a selected group of senior executives who are well established in international markets, technologies, economics and corporate managements. This group of high caliber HR could make geographically small countries big players, and vice versa. Governments can do little helping companies to attract and retain the elites on board. The key element allowing irreplaceable executives to produce irreplaceable results lies on the leadership of the CEOs of individual companies.
Innovation is the life line to develop service trades and sourcing industry. Innovation is no longer an important factor, but indispensable element. The importance of innovation precedes those of costs, prices and deliveries. This summit reiterates the nonpareil significance of innovations in China’s service trades and sourcing development - the reason China’s ITO is still struggling after almost fifteen year development, and also the tunnel China’s sourcing industries have to go through before reach a truly global level.
Some new technologies are disruptors to service trades and sourcing. Among them, AI(artificial intelligence) could be game changer. In terms of impact scale, ITO will be largest, KPO next, and BPO the least for the time being. It’s not a joke when some Indian executives warn of the scenarios where a million of Indian developers might lose their jobs because of AI. As an illustration: over 95% of professional Chinese chess players could be unemployed now because of AlphaGo.
Investment such as M&A remains highly effective, expedient and quick for Chinese companies to go global yet maintain control of own financial and HR footprints. This is a fact that can’t be ignored or twisted because of some bad cases of Chinese investments and security worries. The importance of hiring investment advisory teams with global standard, professional experience and technology expertise can’t be overstated, especially for Chinese investors who are still amateur in international investment marketplace. Language barrier is something investors have to overcome, but there are better ways or not so smart ways. Hiring domestic advisory firms who ranks highest inside China with extensive global network is the #1 advice Chinese corporate investors should accept. The expenses having the professional firms as their representatives could be thought of education investments - quality is more important than prices.
【9】银行、金融服务、保险（Banking，Financial Services and Insurance）行业仍旧是服务贸易及外包的最大使用者。此外，健康卫生与医疗系统、零售业也将会显著地成为大型外包项目的购买行业，来自美国、欧洲的中小型企业将会是服务贸易买家最大的潜在群体。
Companies in banking, financial services and insurance - BFSI- remain largest of the service and sourcing buyers. Health cares, medical systems and retails are the industries more buyers come from. The SMBs from US and EU will be the fastest growing group of buyers.
Few professional organizations representing the interests of providers in service trades and sourcing business are globally recognized, among the many created past decade. Buyers maintain on the driver seats while new tokens of buyer-providers relationships such as share-holders or partners are tossed around. NASSCOM of India might be the only exception. It’s hardly possible to copy NASSCOM other countries or regions, as its model, preconditions or ecosystem are barely operative elsewhere.
In no time of industry history international relations and geopolitics could affect global services and sourcing in such a fundamental way like present time. Entire ecosystem could be changed. Security, stability and reliability become the dominant factors that buyers evaluate existed relationships and potential new providers. Don’t get it wrong, these new priorities are new to many decision makers. The MVSS System (Multi-dimensional Vendor Selection System) developed by Devott is a methodology both buyers and providers want to explore as the system is one of few including the three most urgent components of analytics. Buyers need to develop their own or use the MVSS to assess the disruption depth scientifically and systematically.
Nowadays information security is the most important factor of providers’ qualifications due to latest series of email hacking and data leaking incidents worldwide. The Email-gate occurred in 2016 US president campaign prompt US governments and corporations look at this qualification of any service providers carefully before anything else. Security capability is either weakest link or strong sell of global providers in 2017. It is also the great time for providers to invest on hardware and software needed to improve security system because buyers are more cooperating, even chipping in the efforts they don’t lose their own jobs. If a provider doesn’t get a pass on this, buyers becomes highly nervous, doubtful even if the provider ranks atop in technologies, deliveries, costs and quality.
The primary objective of Devott events is to provide high level platform where decision makers from public offices to private companies, from domestic corporations to global enterprises to discuss latest industry trends, cooperation opportunities and growth strategies.