offshoreOutsourcing2China

Chengdu Software Park: A Dynamic Outsourcing Base

INTRODUCTION: Chengdu Software Park, another one of the country’s 11 national software bases, is part of the Hi-Tech Zone, which became a nationally ranked high-tech industrial development zone in 1991. 32 Fortune 500 companies and over 800 foreign invested enterprises have invested in the zone.

Chengdu is the provincial capital of Sichuan, which is China’s most populous province, and the nation’s fifth largest city. The region is best-known worldwide for its native panda and its trademark spicy Sichuan cuisine: either delights or punishes visitors—although food there is exceptionally good.

Today Chengdu is probably southwest China’s most vibrant economic center, including its development as a base for technology development. Chengdu’s large university population, coupled with lower costs than first-tier cities such as Beijing and Shanghai, make it an attractive site for outsourcing services.

Municipal government estimates placed the value of Chengdu’s total software industry revenues for 2007 at 25 billion yuan (US$3.5 billion).

The city seems building itself to be the financial hub for western China and has successfully attracted major international financial institutions, including Citigroup, HSBC, Standard Chartered Bank, ABN AMRO, Bank of East Asia, and BNP Paribas, as well as domestic financial firms such as the People’s Bank of China’s (China’s central bank) southwest China headquarters there, along with the regional headquarters of many Chinese banking and securities firms. Many of these financial institutions use software park’s BPO services.

TRANSPORTATION: As the gateway city for the southwest region of China, Chengdu boasts a well-developed transportation network including the railway, the road and the air. Four major railway routes meet in Chengdu. There are three national highways and 13 provincial highways in Chengdu.

Chengdu Shuangliu International Airport is the largest one in the west of China. It now has opened 245 domestic airlines, 25 international airlines and the charter flights airlines. It has airlines service with more than 20 foreign cities and now has opened other non-stop scheduled flights to Seoul, Tokyo, Fukuoka, Osaka, Bangkok, Singapore, Katmandu, Kuala Lumpur, Hong Kong and Macau and connecting flights to Los Angeles, London, Paris, Sydney, New York, San Francisco, Vancouver and Frankfurt. It takes about 2.5 hours from Beijing or Shanghai by air.

INFRASTRUCTURE: The city has a well-developed communication network and is  one of the eight communication centers in China. It has eight trunk network nodes in both vertical and horizontal ways with output bandwidth of 30G and access bandwidth of 40G/s. There are 4020 PSTN dialing ports, 600 ISND dialing ports and 150 special-line ports in Chengdu and those ports are connected with international gateway through high-speed interfaces.

The exchange and transmission of long-distance call and short-distance call have been digitalized in Chengdu. It has conducted communication service with 180 countries and regions and over 600 cities. In 2006, 4.39 million households were telephone users, including 1.414 million personal handy-phone system (PHS) users and 9.888 mobile phone users, showing an increase of 1.989 million households within one year and over 2.09 million households had access to the internet.

WORKFORCE: Chengdu is located in the most population sense province of China: Sichun, which is an important education and scientific research center in the southwest of China. It boasts an abundant talent reserves and has more than 630,000 specialized technicians.

There are more than 20 colleges/institutions in the area, including University of Electronic Science and Technology of China, Sichuan University, Southwest JiaoTong University and Chengdu University of Information Technology. Nine of them have set up IT-related majors. These institutions have new enrollment of IT majors of over 20,000 every year.

Moreover, there are 44 community colleges in Chengdu, which produce more than 2000 workers/year specialized in electronics and communication technology, and 3500 workers specialized in mechanics.

There are a also many government subsidized initiatives focusing on training and skill upgrades, to date, there are over 500 companies in the park passed the IT/software certifications by minister of Information, and over 30 companies have CMMI3+ certification.

GOVERNMENT POLICY: Chengdu municipal government has issued a series of preferential policies specifically for the development of outsourcing industry. Like many other software parks, Chengdu municipal government also took other measures to propel the development of outsourcing industry in the aspects of finance, tax, investment and financing, government purchasing, talent nurturing, development of industrial clusters and support-the-strong policies.

In addition, the city allocated 200 million RBM ($30 million USD) from the city’s industrial-development specialized fund to implement the training plan of outsourcing talents. The city also set up development goals of training more talents in its eleventh “five-year plan” period.

LIST OF MAJOR SOFTWARE COMPANIES IN THE PARK: To date, 32 Fortune 500 companies have chosen Chengdu SW park for their offshore outsourcing delivery bases, including many US based companies such as IBM, EMC, Microsoft, SUN, SYMANTEC, Accenture, and Motorola; as well as many Chinese technology giants, including Huawei, ZTE, etc.

Chengdu has also found favor with international consulting firms as a regional base. KPMG opened its first west China office in Chengdu in October 2006. Its arrival was predated by several years by Ernst & Young, an early arrival.