China has the potential to develop a large IT-BPO (Business Process Outsourcing) industry, said a report released by Indian famous IT chamber of commerce NASSCOM here on Tuesday.

With substantial domestic market potential, a sizable educated workforce and strong government emphasis on developing the sector, China will become a major player in IT-BPO industry, said the report.

The NASSCOM report "Tracing China's IT Software Services Industry Evolution," a white paper series of which this is the first, shows that the body considered China as an alternate market, competitive destination and/or potential partners for India.

Speaking at a press conference, NASSCOM President Kiran Karnik said, "China has come a long way in establishing itself as a destination for IT sourcing, with all stakeholders including government, academia and industry working towards improving the regulatory environment, offering incentives to IT companies and increasing the talent pool."

IT software and services is a fledging sector of the Chinese economy, estimated at 12.2 billion U.S. dollars in terms of revenue in 2006. And the domestic market accounts for over 86 percent of the total IT software and service revenues, said the report.

However, the total value of IT software and services exported from China was estimated at 1.8 billion U.S. dollars in 2006, a growth of 41 percent over the previous year. And Japan and South Korea are the largest export markets for Chinese IT software and services, the report added.

"Presently the Chinese IT market is hugely skewed towards IT hardware which is 90 percent of the total market size. The IT software and services sector accounts for just about 0.5 percent of China's gross domestic product in 2006," said NASSCOM Vice President Ameet Nivsarkar.

(Xinhua News Agency August 22, 2007)