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China is surprisingly becoming the preferred location for shared services centres, finds a survey carried out for KPMG by CFO Innovation.

Announced today at the KPMG Outsourcing Summit in Beijing, the "KPMG Pulse Survey: Shared Services and Outsourcing in China" measures the use of shared services and outsourcing providers in Asia. It investigates the preferred location of those shared services centres and outsourcing providers, the services being outsourced, and other related issues.

“Shared services are growing across the board in China – [IT outsourcing (ITO), business process outsourcing (BPO) and knowledge process outsourcing] are occurring simultaneously,” says Ning Wright, Partner in Charge, China Outsourcing Advisory, KPMG China. “It is different from the way that things evolved in other markets in Asia Pacific. Accounting already ranks higher than IT as a function provided by shared services centres, which shows that BPO is already overtaking ITO in China, if not in other parts of the region.”

For the past two years, Asian companies have been outsourcing and offshoring as much as their western counterparts. In fact, 81% of companies now employ a strategy involving outsourcing, shared services, or a combination of the two.

The online survey, conducted in May and June 2010, finds that 42% who say their company has set up shared services centres (SSCs) report that one of those locations is in China. Singapore stands second as a popular location (29%), followed by India (25%), Hong Kong (22%) and Malaysia (20%). The Philippines, which is regarded as a major base for outsourcing providers, hosts the SCCs of only 14% of the companies surveyed.

The survey says that for executives based in the region, China is now a strong and preferred destination. The Philippines, Malaysia and India all have an advantage in certain respects such as language, but in Asia Pacific, language means more than just English. It also means Japanese, Korean and Chinese.

However, while China is now a strong and preferred destination, it still has not reached India’s level of maturity, says the survey. There is huge potential, but with so many locations vying for investment, executives have tough choices to make.

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