An Empirical Analysis on Industrial Organization Structure of Chinese Software Service Outsourcing

Abstract

The global service outsourcing industry has developed rapidly; but how about the software service outsourcing industry in China? Employing the combination research methodologies of field survey, literature research and analysis of the collected data from the survey questionnaire using the SPSS statistic software and its relativity tests, this empirical study analyzed the market structure and performance of Beijing software service outsourcing industry. Based on the SCP paradigm of the industrial organization theory, the conclusion revealed that the market concentration of Beijing software service outsourcing industry was on the low level. The industry possesses the characteristics of low risk, low profit and low product differentiation. There is an apparent trend that increasing profit occurs to the large scale service organizations. Low level price competition dominates the industry at present. The market performance of the industry is therefore low, resulting in the low average profit to most service companies; but the average ratal of these firms is on an upward trend year after year.