The Effect Of IT Outsourcing On A Nation's Innovation Ability

Economic integration is the basic trend of world economic development. Globalization makes international specialization a must to the development of all companies in the world. The emergence of IT outsourcing is a result of this trend, for IT outsourcing can meet the need of companies to build up core competitiveness as well as to choose the mode of modern division of labor. On one hand, many companies seek IT outsourcing to lower their manufacturing cost. On the other hand, they want to follow the trend of division of labor and display their comparative advantages. However, how can IT outsourcing service providers maintain or develop their innovation ability while using their IT advantage is worth pondering. We know that innovation is a driving force to economic growth. Economy can only keep growing when innovation develops constantly.IT outsourcing service entered China between 1999 and 2000 and has made great progress in the last few years. Dalian, with its unique advantages, is developing fast in IT outsourcing field. Dalian will pay primary attention to software and information service and build itself into the IT outsourcing center of China and an important software information service base. At present, there is still huge potential in IT outsourcing market for Chinese IT companies to develop themselves. At the same time, developing innovation is the challenge facing all IT companies.This thesis studies the development of IT outsourcing in global context based on the theories of globalization, comparative advantage, resource allocation, and innovation. It discusses and analyzes the effect of IT outsourcing on a nation's innovation ability. With the foundation of advantages, risks and misunderstanding involved in IT outsourcing, the author expounds the status quo and outlook of China's IT outsourcing. Using the model of the development of IT outsourcing service in Software Park in Dalian, the author puts forward the methods for IT companies to take the innovation challenge from IT outsourcing. The thesis finally concludes with possible solutions for IT companies to deal with both domestic and foreign markets.