BEIJING, Jan. 15 /Xinhua-PRNewswire/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), recently released its analysis on China's software industry.
Growth of management software slowed down in 2007 and SaaS became a driver for new round of growth
According to CCID Consulting, the total volume of China's management software market reached RMB8.5 billion at the end of 2007. The growth rate slowed down and the market was maturing. Management was refined and informatization requirements of clients were more rational. The Small and Medium-sized Businesses (SMBs) sector saw new growth in the management software market driven by the SaaS model.
Figure on Size of China's Management Software Market and Forecast 2003-2007
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Source: CCID Consulting November 2007
Development of China's management software market showed the following features in 2007: The management software market has already entered the industrialization stage; Driven by IT application demands of SMBs, SaaS model products won the favor of mass SMBs; Market competition to contend for SMBs will be fierce. According to CCID Consulting, in the upcoming years, the trend of development of China's management software market can be summarized as follows: Demands of clients for total solutions will be on the increase and vendors will integrate their resources to meet the specific demands of clients for total solutions; The increasing importance of IT services will result in the emerging of a great number of specialized IT service providers.
Soft landing of SOA international standard and better opportunities for the development of China's middleware market
The total size of China's middleware products market reached RMB1.28 billion in 2007 with a year-on-year growth rate of 19.7%. The market is in a stage of rapid development. More and more middleware vendors are adopting SOA as part of their future strategy. The release of SOA development standard this year will usher in unprecedented opportunities for the development of China's middleware market.
Figure on Size and Growth of China's Middleware Products Market 2003-2007
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Source: CCID Consulting November 2007
China's middleware market is still in a start-off stage and it promises enormous market opportunities and room for development. In the year of 2007, China's middleware market showed the following features: Demand became increasingly diversified; Application models were more integrated; and the soft landing of SOA international standards. CCID Consulting projects that in the next five years, China's middleware market will grow at an annual composite growth rate of 16.4%, and size of the market will reach RMB2.74 billion by 2012. China's middleware market will show the following features in the upcoming years: Dominance of SOA and the surfacing importance of EDA; Improving channel architecture and expanding demands on system integrators.
Extensive activation of IT service in China, but poor service-rendering capability in some regions
CCID Consulting's statistics have shown that China's IT service market has already entered the maturity stage and its value has basically been recognized by clients. However, nearly 41% clients say they are not clear about the value of IT service. To a certain extent, this reveals that clients are perplexed about the criteria for the value of IT service.
Figure on Customer Recognition of the Value of IT Service
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Source: CCID Consulting July 2007
The role of the IT departments in some leading enterprises in China has already evolved from a pure technical service organ to a technology-based business partner. Such clients demand planning and implementation service from IT service suppliers to meet their specific requirements, but only a small number of IT service suppliers in China can meet such demands at the moment.
CCID Consulting forecasts that the IT service market will be more integrated in the near future. The percentage of key industries such as finance and transnational IT services investment will increase. The market shall witness segmentation. Some IT service suppliers will enter other service fields through business development while some will increase their share in the market through mergers and acquisitions.
The proportion of software in China's network security products will increase and network security service will see dynamic growth
The total sales revenue of China's network security products market is expected to reach RMB6.687 billion in 2007, growing by 20.3% over that of 2006. The market has maintained a strong moment of stable growth.
Figure on Size and Growth of China's Network Security Products Market 2003-2007
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Source: CCID Consulting November 2007
China's network security products market showed the following features in 2007: The network security products market was further segmented and vendors had different highlights; the "Measures for Protection of Administration of Information Security Levels was released" and industrial clients had increased their investment in construction of their security operation systems; Attacks of Botnet, Trojan, TrojanSpy and Worms persisted, and cyber-crimes had an obvious business purpose.
CCID Consulting forecasts that the size of China's network security products market will grow further in the next five years and will reach RMB15.6 billion by 2012. However, the market growth will show a flat slowing down trend and the market will mature further. The market will develop in these directions: Rapid rise of security service demands and increased proportion of software in security products; Expansion in Mobile applications and related securityproducts will emerge; The range of competition will expand further, as security products vendors integrate and the degree of market concentration will gradually increase.
"Unified Communication" and "Online Mode" will be the trend for development of OA and collaboration software market in the future
The latest research of CCID Consulting shows that the size of China's OA and collaboration software market is expected to reach RMB2.494 billion in 2007, growing year-on-year by 20.8%. The market was still in a stage of rapid growth although the growth rate slowed down slightly. Customer demands were more rational and the ecology of the industrial chain was maturing.
Figure Size and Growth of China's OA and Collaboration Software Market 2004-2007
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Source: CCID Consulting November 2007
(Note: The OA and collaboration software market defined by CCID
Consulting comprises OA suites and collaboration software)
Development of China's OA and collaboration software market showed the following features in 2007: Rapid growth of the collaboration software products and expansion of customer demands to high-end; Intensive competition in the collaboration software market and pattern of competition was not stable; The contents of collaboration software products was enriching and "Unified Communication" became a trend; Online mode became popular with growth in service revenue.
Size of China's Linux software market reached RMB200 million
According to CCID Consulting, the total size of China's Linux software market reached nearly RMB200 million in 2007, an increase of 20% year-on-year, and the market maintained a rapid growth rate in the operating systems market. CCID Consulting concludes the development of China's Linux software market in 2007 as follows: Market resources were further concentrated and collaborations between vendors were prosperous; Popularity of unified procurement declined and regional channels came under focus. For the upcoming years, CCID predicts the market will: Experience differentiation in competition, with opportunities in customized and mobile Linux arising; See market demands to change from concentrated to diversified, and the SMBs and non-traditional market will gradually come under limelight.
Figure on Size and Growth of China's Linux Software Market 2006－2007
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Source: CCID Consulting November 2007
Growth of China's software outsourcing industry slowed down and foreign-invested enterprises deepened penetration into the China market
The size of China's software outsourcing market has the room for leap-forward explosive development. However, unhealthy industrial environment and lack of a complete industrial chain abated the speed of such explosive growth. CCID Consulting forecasts that the growth rate of China's software outsourcing market will dip to around 40% in 2007 from 55% in 2006.
China's software outsourcing vendors are usually small in scale and the added value of their business is usually low. The number of employees of Neusoft -- the largest software outsourcing vendor in China -- involved in software outsourcing is barely 10 thousand while the number of employees of infosys Global of India has reached 80 thousand. The annual business revenue of China's largest software outsourcing vendor is around US$100 million while the business revenue of over ten software outsourcing vendors in India exceeds US$1 billion.
Foreign-invested outsourcing enterprises have deepened their penetration into the China market. Outsourcing service suppliers from Europe, North America and India have enhanced their influence in the market. TCS currently has 800 employees in China and its joint venture company in China started official operation in 2007. EDS established its first global service center in Wuhan and it will establish another global service center in China in 2008.
Multinational outsourcing suppliers enhanced their consolidation
Strategic partners of Microsoft in China include Chinasoft International, Powerise, Lanchao, Digital China, Insigma Technology, Baosight, Bright Oceans Corporation and Micrologo Coding Limited. IBM, Nokia and Motorola have also converged a good number of software outsourcing partners in China. As a result of cooperation over the years, both outsourcing suppliers and outsourcing buyers have witnessed prosperous development.
Software outsourcing is extending to second tier cities from central cities. The major clusters of software outsourcing enterprises in China are mostly concentrated in big cities such as Beijing, Dalian and Shanghai. The three cities accounted for around 50% of the total market. However, this situation saw subtle changes in 2007. Supported by government policies, the software outsourcing industries in Shenyang, Xi'an, Chengdu, Changchun, Jinan, Chongqing and Guangzhou saw significant expansion.
CCID Consulting forecasts that China's software outsourcing market will be highlighted by industrial integration and restructuring in the upcoming years. Development of China's software outsourcing industry will be more pragmatic, rational and steady. Outsourcing service vendors shall increase their capabilities and sustainable development capability through industrial associations and deepened cooperation with outsourcing suppliers. Outsourcing service vendors shall re-examine their areas of business in the face of diversified coverage of software outsourcing. Industrial restructuring will spur rapid development of BPO, SaaS and labor outsourcing.
Figure on Size of China's Software Outsourcing Service Market 2003－2007
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Source: CCID Consulting November 2007
About CCID Consulting
CCID Consulting Co., Ltd. (hereinafter known as "CCID Consulting"), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is directly affiliated to the China Center for Information Industry Development (hereinafter known as "CCID Group"). Headquartered in Beijing, CCID Consulting has set up branch offices in Shanghai, Guangzhou, Shenzhen, and Harbin, with over 300 professional consultants and industry experts. The company's business covers over 200 large and medium-sized cities in China. Apart from home market development, CCID Consulting establishes international cooperation links across the United States, the Asia-Pacific region and Europe with agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.
Based on four major competitive areas: powerful data channels, industrial resources, intense knowledge and a deep understanding of information technology, CCID Consulting provides customers with consulting, research and IT outsourcing services covering strategic planning, IT applications, marketing strategies, human resources and information technology outsourcing. Customers range from industrial IT users, telecommunications companies, energy companies, finance companies, and automobile companies, to government departments at all levels and diversified industrial parks. CCID Consulting commits itself to be the number 1 consultant in strategic consulting, the number 1 brand for strategic consultancy, the number 1 advisor for enterprise management and the number 1 consultant for government decision-making.
For more information, please contact:
Cynthia Liu
Coordinating Manager
CCID Consulting Co., Ltd.
Tel: +86-10-8855-9080
Email: liuyan@ccidconsulting.com
