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Nanjing IT outsourcing goes increasingly global

By Zhao Tingting (China Daily)
Updated: 2010-06-17 11:23

Exhibitions at the recent China International Service Outsourcing Cooperation Conference in Nanjing. [Provided to China Daily]

Firms seal $320 million in deals at recent conference

Some $320 million in contracts for service outsourcing, investment and expansion were signed at the third China International Service Outsourcing Cooperation Conference in Nanjing on June 11 and 12.

Eighty-one overseas enterprises from 12 countries including the United States, Japan, Canada and Britain attended the conference.

Joining them were 300 domestic service outsourcing companies involved in software R&D, animation, industrial design and pharmaceutical research on hand to discuss contracting possibilities, investment and overseas market expansion as well as other forms of cooperation with potential foreign partners.

It is the third time Nanjing has been chosen as the host city of the event.

The service outsourcing industry has become a new growth spot in Nanjing's economy. Its total contract value hit $2.21 billion in 2009, up 178 percent over the previous year. Actual projects begun were valued at $1.8 billion, an increase of 253 percent over 2008.

In the first four months of this year, the number of Nanjing's service outsourcing companies grew to 521 firms employing 122,000 people as the industry signed $219 million in offshore service outsourcing contracts in the period.

Nanjing, named one of China's 20 model cities for service outsourcing, has five national-level demonstration sites - each of which signed contracts exceeding $200 million in 2009 - and two provincial-level centers.

One of the five, the Jiangning economic development zone, reported $458 million in contracts last year, 21 percent of the city's total.

A 2007 government report from the State Council encouraged Chinese companies to undertake international service outsourcing projects and improve the industry's development.

According to a blueprint for the future of the industry, Nanjing is projected to become a world-famous service outsourcing center with an estimated 70 billion yuan ($10.25 billion) in output value and 250,000 employees by 2015.

To reach the target, the government plans to provide more support policies and investment. Funds from national, provincial and municipal government budgets will be invested, especially in training, exploring overseas markets and hiring experts.

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From 2010 to 2012, the central budget has earmarked 5 million yuan annually to provide assistance to Nanjing's service outsourcing companies, especially for small and medium operations, Qiu Shaoming, an official with the Nanjing Municipal Bureau of Commerce, told China Daily.

Tax departments and banks have also been urged to provide financing and assistance to accelerate the development of service outsourcing companies, Qiu added.

As China faces pressure to conserve energy and reduce emissions, service outsourcing is contributing to Nanjing's green economy, making the city more livable, Qiu said.

Nanjing has more than 100,000 graduates from 53 universities and colleges annually, more than 10,000 of whom major in information technology.

Convenient transportation also adds to Nanjing's appeal. The Shanghai-Nanjing high-speed railway, which will be operational in about a month, is expected to shorten the travel time between the two cities to less than two hours.

The Nanjing South Railway Station under construction is designed to be the largest transportation hub in Asia.

In 2009, the government allocated 25 million yuan in subsidies to the service outsourcing sector and trained more than 30,000 people.

Many of the city's service outsourcing companies have now grown into well-recognized brands. Eleven of its software companies, including Linkage Technology Co Ltd and ZTE Soft, have been named as key software enterprises.