China Targets Asia IT Leadership by 2015

IT Ambitions: China will soon pass Japan and India in the total value of its IT services.

China aims to become Asia’s leader in software and IT by the end of its 12th five-year plan (2011-2015) by maintaining a 24% annual growth rate, announced the Ministry of Industry and Information Technology.

By 2015 the central government hopes to grow the software and information technology service industry to a value of 4 trillion yuan ($634 billion). By then the IT services sector is expected to generate annual revenues of 2.5 trillion yuan ($396 billion). The software industry is expected to account for 25% of the IT industry, or about $100 bil., and generate $60 billion in annual exports.

By comparison, Japan — Asia’s current leader — posted revenues of ¥5.12 trillion ($67 bil.) from its global IT and software industry. Those revenues were forecast to grow 4% during fiscal 2011 to about $68.9 bil. Japan’s total electronics and IT industry in 2010, including semiconductors and other hardware, generated global revenues of ¥43.2 trillion yen ($561.3 bil.) and was forecast to grow to $585.9 bil. in 2011.

India, another leading Asian software power, posted $88.1 bil. in revenues from its IT and Business Process Outsourcing (BPO) industry which employed 2.3 mil. workers directly and another 8.6 million indirectly. In 2008 India’s IT sector had posted $64 bil. Of that $31 bil. was in IT services, while $12 bil. was in BPO. Another $8.6 bil. was in engineering services, R&D and software products. Only $12 bil. came from It hardware.

Beijing has also set a goal of nurturing at least 10 software firms with annual revenue of more than 10 billion yuan ($1.6 billion) each during the period. Three to five of those software companies will have revenue of over 100 billion yuan ($16 billion), if it meets its goal. It is also targeting 10 cities generating 100 billion yuan ($16 bil.) each in software and IT services, as well as two to three IT-sector industry groups with annual revenue of 500 billion yuan ($79.3 billion) each, collectively employing 6 million software workers.

To facilitate the meeting of these goals the Ministry plans to streamline its regulations, including pushing the use of authorized versions of software and shortening the time needed for project approval. Software companies will be encouraged to conduct research in emerging areas like cloud computing, the internet of things and the mobile web. More effort will also be placed on enforcing protection for intellectual property rights.

If it meets these goals China is likely to overtake both Japan and India in the IT services and software sectors. Japan’s IT firms have traditionally placed far more emphasis on hardware than on software. India’s IDC has forecast that China will overtake India in IT outsourcing by 2011.